                                 CODE OF VIRGINIA

POWERS OF COMMISSION WHEN AUTHORIZED TO REHABILITATE OR LIQUIDATE INSURERS BY
COURT ORDER; DISBURSEMENT OF AVAILABLE ASSETS TO AN ASSOCIATION, ETC (§
38.2-1509)

A. Whenever the Commission is authorized by order of the Circuit Court of the
City of Richmond to rehabilitate or liquidate any domestic insurer other than an
insurer writing exclusively title, fidelity and surety, credit or ocean marine
insurance, the Commission shall disburse the assets as they become available to
an association. Disbursal shall not be made until an application has been filed
with the Commission by an association for an insolvent insurer&#8217;s available
assets.

B. The Commission shall disburse the assets of an insolvent insurer as they
become available in the following manner:

   1. Pay, after reserving for the payment of the costs and expenses of
   administration, according to the following priorities: (i) claims of secured
   creditors with a perfected security interest not voidable under &#xA7;
   38.2-1513 to the extent of the value of their security, (ii) claims of the
   associations for &#8220;covered claims&#8221; and &#8220;contractual
   obligations&#8221; as defined in &#xA7;&#xA7; 38.2-1603 and 38.2-1701 and
   claims of other policyholders arising out of insurance contracts apportioned
   without preference, (iii) taxes owed to the United States and other debts owed
   to any person, including the United States, which by the laws of the United
   States are entitled to priority, (iv) wages entitled to priority as provided
   in &#xA7; 38.2-1514, and (v) other creditors; and

   2. Equitably allocate disbursements to each of the entitled associations; and

   3. Secure an agreement from each of the entitled associations requiring the
   return to the Commission of any assets previously disbursed to the association
   required to pay claims entitled to priority in subdivision 1 of this
   subsection. No bond shall be required of any entitled association; and

   4. Require a full report to be made by the association to the Commission
   accounting for all assets disbursed to the association, all disbursements made
   from these assets, any interest earned on these assets and any other matter as
   the Commission may require.

C. The Commission shall provide for disbursements to the association in an
amount estimated at least equal to the claim payments made or to be made by the
association for which the association could assert a claim against the
Commission. In addition, the Commission shall provide that if the assets
available for disbursement do not equal or exceed the amount of claim payments
made or to be made by the associations, then disbursements shall be in the
amount of available assets.

D. The Commission shall notify the affected associations and the commissioners
of insurance in the other states of any disbursement made according to this
section. The notice shall be deemed given when sent by certified mail at least
thirty days prior to disbursement.

HISTORY: 1978, c. 696, § 38.1-133.1; 1979, c. 385; 1986, c. 562; 1996, c. 81.