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no meaning if they held that a contingent claim filed before the final date gave
notice for untimely specific claims. The court reasoned that the legislature
intended to have a specific cut‐off date for the filing of claims because if they
failed to have a final date, the "liquidation and distribution of an insolvent
company's assets could not be effected until all potential statutes of limitation
had run."
Massachusetts Commissioner of Insurance v. Massachusetts Accident Co., 318 Mass. 238, 61
N.E.2d 137 (1945). The court held that the term "contingent claims" does not
apply to the claims of policyholders as of the date of the liquidation order as
long as the claims were provable in nature and the policies at that date had a
reasonably ascertainable value and policyholders suffered a loss of such value.
The court held that these claims were noncontingent whether or not disability
policyholders were disabled as of the date of the order and whether or not
they had cancellable or noncancellable policies. The court also held that claims
of policyholders for rights of indemnity for disability which they might
experience after the date of the liquidation order were not "contingent" and
were, therefore, provable against the company's estate.
Missouri
State ex rel. Hyde v. Falkenhaniner, 309 Mo. 381, 274 S.W. 722 (1925). Following
the entry of an order of liquidation against an insolvent insurer, the court
allowed a five‐year time frame for filing claims on the surety bonds issued by it.
Upon the conclusion of the five‐year period, the court distributed assets to
those claims which had been approved and allowed in the proceeding. In
rejecting a challenge by other surety holders, the court noted that the estate
could not wait until all claims had ripened into liquidated claims and thus,
contingent claims would not be allowed to participate in the distribution.
"Provable" claims were those that are no longer contingent and merely need
to fix the amount of the claim prior to the last date allowed for such claims.
New Jersey In the Matter of the Liquidation of Integrity Ins. Co., 193 N.J. 86, 935 A.2d 1184
(2007). This was an appeal from the Appellate Division’s holding that IBNR
claims did not qualify for participation in the final distribution of an insolvent
insurer’s liquidated estate. The Supreme Court affirmed the Appellate court’s
decision. It held that incurred, but not reported claims against an insolvent
insurer are not absolute within the meaning of N.J.S.A. 17:30C‐28(a), which
prohibits distribution of insolvent insurer’s assets to pay contingent claims
unless they become absolute on or before the deadline. It reasoned that the
legislative intent of the statute in using “absolute” was to bar any contingent
claims except when a claim becomes absolute against the insurer on or before
the last day fixed for filing of proofs of claims against the assets of an insurer.
Further, since the Liquidator proposed to estimate IBNR claims of necessity by
looking outside of each claim to other similar claims, IBNR claims failed to satisfy
the basic definition of “absolute”.
In the Matter of the Liquidation of Integrity Ins. Co., No. C‐7022‐86 (N.J. Super.
Ct. June 20, 2008). Following the invalidation of the final dividend plan by the
Supreme Court of New Jersey in In the Matter of the Liquidation of Integrity Ins.
Co., 193 NJ 86, 935 A.2d 1184 (NJ 2007), the Integrity liquidator developed and
proposed a different estate closing plan known as the Liquidation Closing Plan
(“LCP”) which was designed to permit an early closing of the estate without
reference to the contingent claims discussed in the above case. The LCP utilized
a more traditional approach to closing an insolvent estate whereby contingent
claims are not cognizable and a bar date is imposed on the submission of
liquidated claims. Thus, the LCP necessarily imposed a new bar date of June 30,
2009. The LCP required that, for a claim to be considered for payment in must
be absolute by June 30, 2009 and must be filed with the liquidator by Sept. 30,
2009.