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California
In Re Pacific Standard Life Ins. Co., 9 Cal. App. 4th 1197 (1992). After the
Superior Court placed Pacific Standard in conservation, an insurer offered to
purchase Pacific Standard's Texas subsidiary. The conservation manager
signed the bidder's letter, which signified acceptance and agreement to its
terms. After the California Insurance Commissioner asked the conservation
court to approve the sale, the Commissioner received a joint bid more
favorable than the first bid. Upon receiving the second bid, the Commissioner
presented it to the court for approval, and the conservation court confirmed
the terms of the later bid. The first bidder appealed, claiming that the
conservation court improperly considered the later bid. The Court of Appeal
rejected this claim, finding that the original bidder had no standing to appeal.
According to the court, the original bidder was not an "aggrieved party" under
§ 904 of the Code of Civil Procedure because it had no legally recognizable
interest in the Pacific Standard subsidiary.
California Commercial Nat. Bank v. Superior Court, 14 Cal. App. 4th 393 (Ct. App. 1993).
Appellate court reversed the trial court’s approval of a rehabilitation plan
proposed by the Insurance Commissioner for Executive Life Insurance
Company. On appeal, the court found that the plan failed to meet the
standard set forth in Carpenter v. Pacific Mut. Life Ins. Co., 10 Cal. 2d 307, 329
(1937), aff'd, 350 U.S. 297 (1938), or the statutory requirement that claims in
a class share ratably with other claims in the same class. The plan was found
to be legally deficient in three respects: (a) it established a unique "two tier"
valuing system for municipal guaranteed investment contracts that was
without any basis in law, (b) it established a "dual valuation" system that
improperly discriminated between substantially identical policies in the same
class, and (c) it selected a liquidation valuation date for those who chose not
to accept restructured policies that had no relationship to the amount of
assets that would be available for distribution were liquidation to occur.
In re Executive Life Ins. Co., 32 Cal. App. 4th 344 (Ct. App. 1995). Appellate
court upheld lower court's approval of plan of rehabilitation, finding, inter
alia, that (a) the sale of the insurers' junk bond portfolio was permissible, (b)
agreements to fund municipal bonds were entitled to Class 6 priority, (c) the
Conservation Date Statutory Reserves (CDSR) method could be used to
value policyholder claims and (d) estimated expenses of the liquidation
could be charged against the value of the account contract holders that
opted out of the plan.
Quackenbush v. Mission Ins. Co., 62 Cal. App. 4th 797 (Ct. App. 1998).
Appellate court affirmed lower court order approving the Insurance
Commissioner's amended liquidation plan for Mission Insurance Company,
rejecting the reinsurer's argument that the plan would violate statutory
provisions precluding contingent and unliquidated claims from participating
in distributions of the estate. The plan expressly prohibited requiring
payment from reinsurers for claims until their liability and quantum had been
determined. While claimants were permitted to submit contingent and
unliquidated claims, the Commissioner was required to provide reinsurers
notice and an opportunity to contest the fixing of liability and quantum. The
court rejected the reinsurer's argument that reinsurers would not, as a
practical matter, be provided such notice and opportunity.
Quackenbush v. Mission Ins. Co., 46 Cal. App. 4th 458 (Ct. App. 1996). The
Insurance Commissioner as liquidator of Mission Insurance Company filed a
proposed liquidation plan requiring Mission's reinsurers to pay reinsurance
proceeds in respect of estimated contingent claims, including incurred but