Section 7403. Order of rehabilitation; advances from property/casualty insurance security fund; termination

(a) An  order  to  rehabilitate  a  domestic  insurer  shall direct the superintendent and his successors in
  office, as rehabilitator, forthwith to take possession of  the  property
  of  such  insurer  and to conduct the business thereof, and to take such
  steps toward the removal of the causes and conditions  which  have  made
  such proceeding necessary as the court shall direct.
    * (b)  (1)  If:  (i)  provision  is  made  therefor  in  an  order  to
  rehabilitate a domestic insurer, (ii) more than  fifty  percent  of  the
  insurer's net direct premiums in the preceding three calendar years were
  derived   from  business  in  this  state  which  is  protected  by  the
  property/casualty insurance security fund, and (iii)  such  insurer  has
  consented  to  rehabilitation,  the commissioner of taxation and finance
  shall advance monies of such fund, in such amounts as specified  in  the
  court's order, to the rehabilitator to enable the insurer to comply with
  any surplus requirement or other requirement of this chapter.
    (2)  Before  issuing  such  order,  the court shall determine that the
  insurer has the potential and capability, pursuant to a  plan  submitted
  by   the   rehabilitator,  of  complying  with  all  surplus  and  other
  requirements of this chapter and  repaying  such  advance  to  the  fund
  within  two years after termination of the rehabilitation proceeding, at
  a rate of interest approved  by  the  superintendent  to  be  determined
  annually  which shall not be less than the average rate of return of the
  fund as determined by the  superintendent  for  the  preceding  calendar
  year.
    (3)  The plan shall include: (i) an explanation of the factors leading
  to the insurer's condition requiring rehabilitation and  the  procedures
  proposed  to  improve  its  condition,  and (ii) a provision for posting
  collateral with the rehabilitator as security for the  advance,  to  the
  extent that the insurer's assets permit.
    (4) The court shall not order any advance to the rehabilitator without
  his  specific request or if the insurer's required capital or surplus is
  impaired in an amount exceeding the greater of thirty million dollars or
  fifteen percent of the insurer's net  direct  premium  writings  in  the
  previous  calendar  year.  Total advances to an insurer shall not exceed
  the greater of forty million dollars  or  twenty  percent  of  such  net
  direct  premium  writings.  No  advance  shall  be made on or after July
  first, two thousand which would lower the amount of assets in  the  fund
  below one hundred ninety-five million dollars.
    (5)  Advances shall, in all respects except as to rate of interest, be
  subject to the provisions of section one thousand three hundred seven of
  this chapter, provided that in the  event  that  an  insurer  which  has
  received  an  advance  pursuant  to  this subsection is subsequently the
  subject of an order of liquidation,  the  claim  of  the  fund  for  the
  advance and any accrued interest shall be paid to the fund in accordance
  with  the  provisions of section seven thousand four hundred thirty-four
  of this article.
    (6) This subsection shall expire July first,  two  thousand,  provided
  that the insurer's obligation to repay to the fund moneys advanced to it
  under  this  subsection,  and  the fund's claim for the advance, and any
  accrued interest, as a priority over all  non-secured  creditors,  shall
  survive such expiration date.
    * NB Expired July 1, 2000
    (c)  If  at  any  time  the  superintendent  deems  further efforts to
  rehabilitate such insurer would be futile, he may  apply  to  the  court
  under this article for an order of liquidation.
    (d)  The rehabilitator or any interested person upon due notice to the
  superintendent, at any time, may apply  for  an  order  terminating  any

  rehabilitation   proceeding   and  permitting  such  insurer  to  resume
  possession of its property and the conduct of its business, but no  such
  order  shall  be  granted  except  when, after a full hearing, the court
  shall  determine  that  the  purposes  of the proceeding have been fully
  accomplished.