KRS 304.33-290: Fraudulent transfer prior to petition -- Exceptions.

(1) Definition and effect. Except as provided in subsection (5) of this section and KRS

304.33-055:

(a) Every transfer made or suffered and every obligation incurred by an insurer

within one (1) year prior to the filing of a successful petition for rehabilitation

or liquidation under this subtitle shall be fraudulent as to then existing and

future creditors if made or incurred without fair consideration, or with actual

intent to hinder, delay or defraud either existing or future creditors;

(b) A transfer made or an obligation incurred by an insurer ordered to be

rehabilitated or liquidated under this subtitle, which is fraudulent under this

section, may be avoided by the receiver, exce pt as to a person who in good

faith is a purchaser, lienor, or obligee for a present fair equivalent value; and

except that any purchaser, lienor, or obligee, who in good faith has given a

consideration less than fair for such transfer, lien, or obligation, may retain the

property, lien, or obligation as security for repayment; and

(c) The court may, on due notice, order any such transfer or obligation to be

preserved for the benefit of the estate, and in that event the receiver shall

succeed to and may enforce the rights of the purchaser, lienor, or obligee.

(2) Perfection of transfers.

(a) Personal property. 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 obtain able by legal or equitable proceedings on a simple

contract could become superior to the rights of the transferee under subsection

(3) of KRS 304.33-310.

(b) Real property. 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) Equitable liens. A transfer which creates an equitable lien shall not be deemed

to be perfected if there are availabl e means by which a legal lien could be

created.

(d) Transfer not perfected prior to petition. Any 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) Actual creditors unnecessary. This subsection shall apply whether or not there

are or were creditors who might have obtained any liens or persons who might

have become bona fide purchasers.

(3) Fraudulent reinsurance transactions. Any transaction of the insurer with a reinsurer

shall be deemed fraudulent and may be avoided by the receiver under subsection (1)

of this section if:

(a) The transaction consists of the termination, adjustment or settl ement of a

reinsurance contract in which the reinsurer is released from any part of its

duty to pay the originally specified share of losses that had occurred prior to

the time of the transaction, unless the reinsurer gives a present fair equivalent

value for the release; and

(b) Any part of the transaction took place within one (1) year prior to the date of

filing of the petition through which the receivership was commenced.

(4) Every person receiving any property from the insurer or any benefit thereof wh ich

is a fraudulent transfer under this section shall be personally liable therefor and

shall be bound to account to the liquidator.

(5) (a) Except as provided in paragraph (b) of this subsection, any transfer of, and

any obligation to transfer, money or other property from an insurer-member to

the federal home loan bank under a federal home loan bank security, pledge,

collateral, or guarantee agreement, or other similar arrangement or credit

enhancement, shall not be deemed fraudulent and shall not be avoi ded by the

receiver under subsection (1) of this section if the agreement, arrangement, or

enhancement is:

1. Made in the ordinary course of business; and

2. Made in compliance with the applicable federal home loan bank

agreement.

(b) A transfer may be dee med fraudulent and may be avoided by the receiver

under subsection (1) of this section if the transfer is made with the intent to

hinder, delay, or defraud:

1. An insurer-member;

2. The receiver of the insurer-member; or

3. Existing or future creditors of the insurer-member.