Sec. 194. Rights and liabilities of creditors fixed upon liquidation.

417 words·~2 min read·/il/chapter-215/act-5/194

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

(a)The rights and liabilities of the company and of its creditors, policyholders, stockholders or members and all other persons interested in its assets, except persons entitled to file contingent claims, shall be fixed as of the date of the entry of the Order directing liquidation or rehabilitation unless otherwise provided by Order of the Court. The rights of claimants entitled to file contingent claims or to have their claims estimated shall be determined as provided in Section 209.

(b)The Director may, within 2 years after the entry of an order for rehabilitation or liquidation or within such further time as applicable law permits, institute an action, claim, suit, or proceeding upon any cause of action against which the period of limitation fixed by applicable law has not expired at the time of filing of the complaint upon which the order is entered.

(c)The time between the filing of a complaint for conservation, rehabilitation, or liquidation against the company and the denial of the complaint shall not be considered to be a part of the time within which any action may be commenced against the company. Any action against the company that might have been commenced when the complaint was filed may be commenced for at least 180 days after the complaint is denied.

(d)Notwithstanding subsection

(a)of this Section, policies of life, disability income, long-term care, health insurance or annuities covered by a guaranty association, or portions of such policies covered by one or more guaranty associations under applicable law shall continue in force, subject to the terms of the policy (including any terms restructured pursuant to a court-approved rehabilitation plan) to the extent necessary to permit the guaranty associations to discharge their statutory obligations. Policies of life, disability income, long-term care, health insurance or annuities, or portions of such policies not covered by one or more guaranty associations shall terminate as provided under subsection

(a)of this Section and paragraph

(6)of Section 193 of this Article, except to the extent the Director proposes and the court approves the use of property of the liquidation estate for the purpose of either

(1)continuing the contracts or coverage by transferring them to an assuming reinsurer, or

(2)distributing dividends under Section 210 of this Article. Claims incurred during the extension of coverage provided for in this Article shall be classified at priority level

(d)under paragraph

(1)of Section 205 of this Article.