N.Y. Insurance Law § 7425: Voidable transfers

§ 7425. Voidable transfers. (a) Any transfer of, or lien created upon,

the property of an insurer within twelve months prior to the granting of

an order to show cause under this article with the intent of giving to

any creditor or enabling him to obtain a greater percentage of his debt

than any other creditor of the same class and which is accepted by such

creditor having reasonable cause to believe that such a preference will

occur, shall be voidable.

(b) Every director, officer, employee, shareholder, member or other

person acting on behalf of such insurer who shall be concerned in any

such prohibited act and every person receiving thereby any property of

such insurer or the benefit thereof shall be personally liable therefor

and shall be bound to account to the superintendent.

(c) The superintendent, as liquidator, rehabilitator or conservator in

any proceeding under this article, may avoid any transfer of, or lien

upon, the property of an insurer which any creditor, shareholder or

member of such insurer might have avoided and may recover the property

transferred or its value from the transferee unless he was a bona fide

holder for value prior to the date of the granting of an order to show

cause under this article. Such property or its value may be recovered

from anyone who has received it except a bona fide holder for value.

(d) Notwithstanding the provisions of subsection (a) of this section,

a commutation of a reinsurance agreement, approved by the superintendent

pursuant to section one thousand three hundred twenty-one of this

chapter, shall not be voidable as a preference.

(e) (1) Notwithstanding subsection (a) of this section or any other

provision of this article to the contrary, (i) a receiver shall not void

a transfer of money or other property arising under or in connection

with a federal home loan bank security agreement that is made before the

commencement of a formal proceeding under this article in the ordinary

course of business and in compliance with the security agreement unless

such transfer was made with actual intent to hinder, delay or defraud

the insurer-member, a receiver appointed for the insurer-member or

existing or future creditors; and (ii) a receiver shall not void a

redemption or repurchase of any stock or equity securities which was

made by the federal home loan bank within four months of a formal

commencement of the delinquency proceedings or which received prior

approval of the receiver.

(2) Following the appointment of a receiver for an insurer-member and

upon request of the receiver, the federal home loan bank shall in good

faith, within five days of such request, provide a process and establish

timing for all of the following:

(i) the release of collateral that exceeds the lending value, as

determined in accordance with the federal home loan bank security

agreement, required to support secured obligations remaining after any

repayment of advances;

(ii) the release of any collateral remaining in the federal home loan

bank's possession following repayment in full of all outstanding secured

obligations;

(iii) the payment of fees and the operation of deposits and other

accounts with the federal home loan bank; and

(iv) the redemption or repurchase of federal home loan bank stock or

excess stock of any class that an insurer-member is required to own

consistent with federal law and regulations, the federal home loan

bank's capital plan, and the capital stock practices currently

applicable to the federal home loan bank's entire membership.

(3) Upon the request of the receiver for an insurer-member, the

federal home loan bank shall provide any available options that are

acceptable to the federal home loan bank for such insurer-member to

renew or restructure an advance to defer associated prepayment fees, to

the extent that market conditions, the terms of the advance outstanding

to the insurer-member, the applicable policies of the federal home loan

bank and compliance with the federal home loan bank act and

corresponding regulations permit.

(4) Prior to and during a proceeding under this article against an

insurer-member, the department, its receiver or rehabilitator shall be

entitled to make reasonable requests to the federal home loan bank, and

the federal home loan bank shall, to the fullest extent permitted by

federal law, support the department with efforts to:

(i) permit and facilitate collateral substitutions;

(ii) permit and facilitate transfer of agreement to a purchaser and/or

another federal home loan bank member;

(iii) permit additional advances in case of the need for additional

liquidity; or

(iv) take other actions that may facilitate orderly proceedings prior

to and during a delinquency.

(5) To the extent permitted by applicable law and for the purposes of

a federal home loan bank assisting the department, a federal home loan

bank shall upon request of the department provide in confidence to the

department periodic information concerning its financial condition,

underwriting, and credit opinions regarding an insurer-member.

(6) Nothing in this subsection shall affect the federal home loan

bank's rights pursuant to 12 CFR 1266.4, which relates to limitations on

access to advances.