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injunction and pursued its remedies in D.C. including the execution of its
judgment against a building transferred post‐judgment from CUIC to its
parent in return for a note against cash in a bank account. The Court of
Appeals posed the question presented as: “To what extent does the
appointment of a receiver for a Delaware insurance company by a chancery
court in Delaware – a state which has enacted the Uniform Insurers’
Liquidation Act…prevent a judgment creditor from executing on the
insurance company’s property located in the District of Columbia?” Prior to
the appointment of the receiver in Delaware, the landlord had served an
attachment on CUIC’s bank; a later attachment suggested additional funds
had been received by the bank. Held, landlord was entitled to those funds in
the bank at the time of the first attachment; additional cash collected after
the appointment of the receiver could not be attached by the landlord. The
transfer of the building to the parent company to protect it from attachment
was a fraudulent conveyance as a matter of law and thus ineffective. The
landlord’s lien, since it predated the receivership, could not be enforced by
foreclosure. Further, because the District of Columbia (unlike Delaware) had
not adopted the Uniform Liquidation of Insurers Act, the Delaware receiver
was not vested with title to the assets in question. The court further
declined to adopt the ULIA’s scheme of priorities as a matter of D.C.
common law.
Florida Florida Dep’t of Ins. v. Blackburn, 633 So. 2d 521 (Fla. Dist. Ct. App. 1994).
The court held that the receiver stated cognizable causes of action on behalf
of an insolvent insurer against prior owners and managers for management,
waste, RICO and voidable preferences. The court rejected “sole
shareholder” argument that, under the allegations of the complaint,
defendant damaged only himself, because creditors of the insurer also were
damaged. The court also refused to impute the defendant’s alleged
misconduct to the insolvent insurer under the imputation rule (in pari
delicto), because the imputation rule protects only innocent parties.
Florida Dep’t of Ins. v. Blackburn (In re Blackburn), 209 B.R. 4 (Bankr. M.D.
Fla. 1997). A natural person, as well as an artificial, non‐natural person such
as a corporation, can be an “affiliate” of an insurance company as such term
is used in provision of Florida insurer insolvency statute allowing a receiver
to recover distributions made to affiliates within five years before liquidation
petition. The court also held that an officer’s or director’s breach of duties
inherent in their office does not create a debt which is non‐dischargeable in
bankruptcy.
Gibson v. Resolution Trust Corporation, 750 F. Supp. 1565 (S.D. Fla. 1990).
Premiums paid to an insurance company are not held in trust for the benefit of
the insured, but are assets of the insurance company available to satisfy the
insurance company's general debts. Accordingly, an insolvent insurer does not
hold paid premiums in trust for an insured; rather, the premiums are assets of
the estate subject to general creditors.
In re Allen, 217 B.R. 945 (Bankr. M.D. Fla. 1998). The receiver for an insolvent
insurer obtained a judgment against Allen. Allen filed bankruptcy, and his
discharge was denied because he had failed to account for assets.
Notwithstanding the denial of his discharge, Allen sought to avoid the lien of
the judgment on property that he had claimed as exempt. The bankruptcy
court agreed with Allen, holding that a debtor in bankruptcy may avoid a lien
on exempt property regardless of the nature of the underlying debt. See
also In re Clark, 217 B.R. 943 (Bankr. M.D. Fla. 1998).
Georgia
Conex Freight Systems v. Georgia Insolvency Pool, 561 S.E. 2d 221 (Ga. Ct. App.
2002). Corporation seeking insurance coverage from Insurers Insolvency Pool