Idaho State Statutes - Idaho Attorney Directory

(1) (a) A preference is a
transfer of any of the property of an insurer to or for the benefit of a
creditor, for or on account of an antecedent debt, made or suffered by the
insurer within one (1) year before the filing of a successful petition for
liquidation under this act, the effect of which transfer may be to enable the
creditor to obtain a greater percentage of this debt than another creditor of
the same class would receive. If a liquidation order is entered while the
insurer is already subject to a rehabilitation order, then such transfers
shall be deemed preferences if made or suffered within one (1) year before the
filing of the successful petition for rehabilitation or within two (2) years
before the filing of the successful petition for liquidation, whichever time
is shorter.
(b) Any preference may be avoided by the liquidator if:
1. The insurer was insolvent at the time of the transfer;
2. The transfer was made within four (4) months before the filing of the
petition;
3. The creditor receiving it or to be benefited thereby or his agent
acting with reference thereto had, at the time when the transfer was made,
reasonable cause to believe that the insurer was insolvent or was about to
become insolvent; or
4. The creditor receiving it was an officer, or any employee or attorney
or other person who was in fact in a position of comparable influence in
the insurer to an officer whether or not he held such position, or any
shareholder holding directly or indirectly more than five per cent (5%) of
any class of any equity security issued by the insurer, or any other
person, firm, corporation, association, or aggregation of persons with
whom the insurer did not deal at arm's length.
(c) Where the preference is voidable, the liquidator may recover the
property or, if it has been converted, its value from any person who has
received or converted the property, except where a bona fide purchaser or
lienor has given less than fair equivalent value, he shall have a lien upon
the property to the extent of the consideration actually given by him. Where a
preference by way of lien or security title is voidable, the court may on due
notice order the lien or title to be preserved for the benefit of the estate,
in which event the lien or title shall pass to the liquidator.
(2) (a) A transfer of property other than real property shall be deemed
to be made or suffered when it becomes so far perfected that no subsequent
lien obtainable by legal or equitable proceedings on a simple contract could
become superior to the rights of the transferee.
(b) A transfer of real property shall be deemed to be made or suffered
when it becomes so far perfected that no subsequent bona fide purchaser from
the insurer could obtain rights superior to the rights of the transferee.
(c) A transfer which creates an equitable lien shall not be deemed to be
perfected if there are available means by which a legal lien could be created.
(d) A transfer not perfected prior to the filing of a petition for
liquidation shall be deemed to be made immediately before the filing of the
successful petition.
(e) The provisions of this subsection apply whether or not there are or
were creditors who might have obtained liens or persons who might have become
bona fide purchasers.
(3) (a) A lien obtainable by legal or equitable proceedings upon a simple
contract is one arising in the ordinary course of such proceedings upon the
entry or docketing of a judgment or decree, or upon attachment, garnishment,
execution, or like process, whether before, upon, or after judgment or decree
and whether before or upon levy. It does not include liens which under
applicable law are given a special priority over other liens which are prior
in time.
(b) A lien obtainable by legal or equitable proceedings could become
superior to the rights of a transferee, or a purchaser could obtain rights
superior to the rights of a transferee within the meaning of subsection (2) of
this section, if such consequences would follow only from the lien or purchase
itself, or from the lien or purchase followed by any step wholly within the
control of the respective lienholder or purchaser, with or without the aid of
ministerial action by public officials. Such a lien could not, however, become
superior and such a purchase could not create superior rights for the purpose
of subsection (2) of this section, through any acts subsequent to the
obtaining of such a lien or subsequent to such a purchase which require the
agreement or concurrence of any third party or which require any further
judicial action or ruling.
(4) A transfer of property for or on account of a new and contemporaneous
consideration which is deemed under subsection (2) of this section, to be made
or suffered after the transfer because of delay in perfecting it does not
thereby become a transfer for or on account of an antecedent debt if any acts
required by the applicable law to be performed in order to perfect the
transfer as against liens or bona fide purchasers' rights are performed within
twenty-one (21) days or any period expressly allowed by the law, whichever is
less. A transfer to secure a future loan, if such a loan is actually made, or
a transfer which becomes security for a future loan, shall have the same
effect as a transfer for or on account of a new and contemporaneous
consideration.
(5) If any lien deemed voidable under subsection (1)(b) hereof has been
dissolved by the furnishing of a bond or other obligation, the surety, which
has been indemnified directly or indirectly by the transfer of or the creation
of a lien upon any property of an insurer before the filing of a petition
under this act which results in a liquidation order, the indemnifying transfer
or lien shall also be deemed voidable.
(6) The property affected by any lien deemed voidable under subsections
(1) and (5) of this section shall be discharged from such lien, and that
property and any of the indemnifying property transferred to or for the
benefit of a surety shall pass to the liquidator, except that the court may on
due notice order any such lien to be preserved for the benefit of the estate
and the court may direct that such conveyance be executed as may be proper or
adequate to evidence the title of the liquidator.
(7) The district court shall have summary jurisdiction of any proceeding
by the liquidator to hear and determine the rights of any parties under the
provisions of this section. Reasonable notice of any hearing in the proceeding
shall be given to all parties in interest, including the obligee of a
releasing bond or other like obligation. Where an order is entered for the
recovery of indemnifying property in kind or for the avoidance of an
indemnifying lien, the court, upon application of any party in interest, shall
in the same proceeding ascertain the value of the property or lien; and if the
value is less than the amount for which the property is indemnified or than
the amount of the lien, the transferee or lienholder may elect to retain the
property or lien upon payment of its value, as ascertained by the court, to
the liquidator, within such reasonable times as the court shall fix.
(8) The liability of a surety under a releasing bond or other like
obligation shall be discharged to the extent of the value of the indemnifying
lien nullified and voided by the liquidator, or where the property is retained
under subsection (7) of this section to the extent of the amount paid to the
liquidator.
(9) If a creditor has been preferred, and afterward in good faith gives
the insurer further credit without security of any kind, for the property
which becomes a part of the insurer's estate, the amount of the new credit
remaining unpaid at the time of the petition may be set off against the
preference which would otherwise be recoverable from him.
(10) If an insurer shall, directly or indirectly, within four (4) months
before the filing of a successful petition for liquidation under this act, or
at any time in contemplation of a proceeding to liquidate it, pay money or
transfer property to an attorney-at-law for services rendered or to be
rendered, the transaction may be examined by the court on its own motion or
shall be examined by the court on petition of the liquidator and shall be held
valid only to the extent of a reasonable amount to be determined by the court,
and the excess may be recovered by the liquidator for the benefit of the
estate, provided that where the attorney is in a position of influence in the
insurer or an affiliate thereof, payment of any money or the transfer of any
property to the attorney-at-law for services rendered or to be rendered shall
be governed by the provisions of subsection (1)(b)4 of this section.
(11) (a) Every officer, manager, employee, shareholder, member,
subscriber, attorney, or any other person acting on behalf of the insurer who
knowingly participates in giving any preference when he has reasonable cause
to believe the insurer is or is about to become insolvent at the time of the
preference shall be personally liable to the liquidator for the amount of the
preference. It is permissible to infer that there is reasonable cause to so
believe if the transfer was made within four (4) months before the date of
filing of this successful petition for liquidation.
(b) Every person receiving any property from the insurer or the benefit
thereof as a preference voidable under subsection (1) of this section shall be
personally liable therefor and shall be bound to account to the liquidator.
(c) Nothing in this subsection shall prejudice any other claim by the
liquidator against any person.

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