{"data":{"id":"us-ky/krs-304.33-140","jurisdiction":"us-ky","citation":"KRS 304.33-140","heading":"Grounds for rehabilitation.","body":"(1) The commissioner may apply by verified petition to the court for an order directing\nthe commissioner to rehabilitate a domestic insurer or an alien insurer domiciled in\nthis state on any one (1) or more of the following grounds:\n(a) Any ground on which the commissioner may apply for an order of liquidation\nunder KRS 304.33 -190, whenever the commissioner believes that the insurer\nmay be successfully rehabilitated without substantial increase in the risk of\nloss to creditors of the insurer or to the public;\n(b) That the commissioner has reasonable cause to believe that there has been\nembezzlement from the insurer, wrongful sequestration or diversion of the\ninsurer's assets, forgery or fraud affecting the insurer, or other illegal conduct\nin, by, or with respect to the insurer, that if established would endanger assets\nin an amount threatening the solvency of the insurer;\n(c) That any one (1) of the following circumstances has occurred and the\ncommissioner has reasonable cause to believe that the insurer is inso lvent or\nthat assets are endangered in an amount threatening the solvency of the\ninsurer:\n1. That information coming into the commissioner's possession has\ndisclosed substantial and not adequately explained discrepancies\nbetween the insurer's records and t he most recent annual report or other\nofficial company reports;\n2. That the insurer has failed to remove any person who in fact has\nexecutive authority in the insurer, whether an officer, manager, general\nagent, employee, or other person, if the person has  been found by the\ncommissioner after notice and hearing to be dishonest or untrustworthy\nin a way affecting the insurer's business;\n3. That control of the insurer, whether by stock ownership or otherwise,\nand whether direct or indirect, is in one (1) or more persons found by the\ncommissioner after notice and hearing to be dishonest or untrustworthy;\n4. That any person who in fact has executive authority in the insurer,\nwhether an officer, manager, general agent, employee, or other person,\nhas refused to be  examined under oath by the commissioner concerning\nits affairs, whether in this state or elsewhere, and after reasonable notice\nof the fact the insurer has failed promptly and effectively to terminate\nthe employment and status of the person and all his or  her influence on\nmanagement;\n5. That the insurer has refused to submit its books, accounts, documents, or\nother records to the reasonable examination or inspection of the\ncommissioner or the commissioner's authorized representative;\n(d) That the insurer is or is about to become insolvent;\n(e) That the insurer is engaging in a systematic practice of reaching settlements\nwith and obtaining releases from policyholders or third -party claimants and\nthen unreasonably delaying payment of or failing to pay the agr eed upon\nsettlements;\n(f) That the insurer is in such condition that the further transaction of business\nwould be hazardous, financially or otherwise, to its policyholders, its\ncreditors, or the public;\n(g) That within the previous twelve (12) months the insurer has systematically\nattempted to compromise with its creditors on the ground that it is financially\nunable to pay its claims in full;\n(h) That without first obtaining the written consent of the commiss ioner, the\ninsurer has transferred, or attempted to transfer, substantially its entire\nproperty or business, or has entered into any transaction the effect of which is\nto merge, consolidate, or reinsure substantially its entire property or business\nin or with the property or business of any other person;\n(i) That the insurer or its property has been or is the subject of an application for\nthe appointment of a receiver, trustee, custodian, conservator, or sequestrator\nor similar fiduciary of the insurer or i ts property otherwise than as authorized\nunder this subtitle, and that such appointment has been made or is imminent,\nand that such appointment might oust the courts of this state of jurisdiction or\nprejudice orderly delinquency proceedings under this subtitle;\n(j) That within the previous year the insurer has willfully violated its charter or\narticles of incorporation or any insurance law or regulation of this state, or\nhaving become aware within the previous year of an unintentional violation\nhas failed t o take all reasonable steps to remedy the situation resulting from\nthe violation and to prevent future violations;\n(k) That the directors of the insurer are deadlocked in the management of the\ninsurer's affairs and that the members or shareholders are unab le to break the\ndeadlock and that irreparable injury to the insurer, its creditors or its\npolicyholders is threatened by reason thereof;\n(l) That the insurer has failed to file its annual report or other report within the\ntime allowed by law, and after written demand by the commissioner has failed\nto give an adequate explanation immediately; and\n(m) That two-thirds (2/3) of the board of directors, or the holders of a majority of\nthe shares entitled to vote, or a majority of members or policyholders of an\ninsurer subject to control by its members or policyholders, consent to\nrehabilitation under this subtitle.\n(2) Upon the issuance of an order directing the commissioner to rehabilitate a domestic\ninsurer, the court shall have exclusive jurisdiction over all m atters relating to the\nrehabilitation, including, but not limited to, the proper scope and application of the\nprovisions of this subtitle to the rehabilitation as well as all interpretation and\nenforceability of all contracts of insurance to which the insurer is a party.","path":[],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=29831","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:57:54Z","sha256":"29a7321b000d01f1c70d2151bc7cb97dfb369e5cd031bb20f7a17864141b2679","source_id":"us-ky","stale":false,"prev":"us-ky/krs-304.33-130","next":"us-ky/krs-304.33-150"},"notice":"GroundRules: Original legal text. Not legal advice."}