{"data":{"id":"us-ky/krs-304.33-310","jurisdiction":"us-ky","citation":"KRS 304.33-310","heading":"Voidable preferences and liens.","body":"Except as provided in KRS 304.33-055:\n(1) Preferences.\n(a) Preference defined. A preference is a transfer of any of the property of an\ninsurer to or for the benefit of a creditor, for or on account of an antecedent\ndebt made or suffered by the insurer within one (1) year before the filing of a\nsuccessful petition for liquidation under this subtitle, the effect of which\ntransfer may be to enable the creditor to obtain a greater percentage of his or\nher debt than another creditor of the same class would receive. If a liquidation\norder is entered while the insurer is already subject to a rehabilitation order,\ntransfers otherwise qualifying shall be deemed preferences if made or suffered\nwithin one (1) year before the filing of the successful petition for\nrehabilitation or within two (2) years before the filing of the s uccessful\npetition for liquidation, whichever time is shorter.\n(b) Invalidation of preferences. Except as provided in subsection (10) of this\nsection, any preference may be avoided by the liquidator, if:\n1. The insurer was insolvent at the time of the transfer;\n2. The transfer was made within four (4) months before the filing of the\npetition;\n3. The creditor receiving it or to be benefited thereby or his or her agent\nacting with reference thereto had reasonable cause to believe at the time\nwhen the transfer was made that the insurer was insolvent or was about\nto become insolvent; or\n4. The creditor receiving it was an officer, employee, attorney or other\nperson who was in fact in a position of comparable influence in the\ninsurer to an officer whether or not he or she held such position, or any\nshareholder holding directly or indirectly more than five percent (5%) of\nany class of any equity security issued by the insurer, or any other\nperson with whom the insurer did not deal at arm's length.\nWhere the preference is voidable, the liquidator may recover the property or,\nif it has been converted, its value from any person who has received or\nconverted the property, except a bona fide purchaser from or lienor of the\ndebtor's transferee for a prese nt fair equivalent value. Where the bona fide\npurchaser or lienor has given less than fair equivalent value, he or she shall\nhave a lien upon the property to the extent of the consideration actually given\nby him or her. Where a preference by way of lien or  security title is voidable,\nthe court may on due notice order the lien or title to be preserved for the\nbenefit of the estate, in which event the lien or title shall pass to the liquidator;\n(2) Perfection of transfers.\n(a) Personal property. A transfer of property other than real property is deemed to\nbe made or suffered when it becomes so far perfected that no subsequent lien\nobtainable by legal or equitable proceedings on a simple contract could\nbecome superior to the rights of the transferee.\n(b) Real property. A transfer of real property is deemed to be made or suffered\nwhen it becomes so far perfected that no subsequent bona fide purchaser from\nthe insurer could obtain rights superior to the rights of transferee.\n(c) Equitable liens. A transfer which c reates an equitable lien is not deemed to be\nperfected if there are available means by which a legal lien could be created.\n(d) Transfers not perfected prior to petition. A transfer not perfected prior to the\nfiling of a petition for liquidation shall be d eemed to be made immediately\nbefore the filing of the successful petition.\n(e) Actual creditors unnecessary. This subsection applies whether or not there\nwere creditors who might have obtained liens or persons who might have\nbecome bona fide purchasers;\n(3) Liens by legal or equitable proceedings.\n(a) Definition. A lien obtainable by legal or equitable proceedings upon a simple\ncontract is one arising in the ordinary course of such proceedings upon the\nentry or docketing of a judgment or decree, or upon att achment, garnishment,\nexecution or like process, whether before, upon or after judgment or decree\nand whether before or upon levy. It does not include liens which under\napplicable law are given a special priority over other liens which are prior in\ntime.\n(b) When liens are superior. A lien obtainable by legal or equitable proceedings\ncould become superior to the rights of a transferee, or a purchaser could\nobtain rights superior to the rights of a transferee within the meaning of\nsubsection (2) of this sect ion, if such consequences would follow only from\nthe lien or purchase itself, or from the lien or purchase followed by any step\nwholly within the control of the respective lienholder or purchaser, with or\nwithout the aid of ministerial action by public off icials. Such a lien could not,\nhowever, become superior and such a purchase could not create superior\nrights for the purpose of subsection (2) of this section through any acts\nsubsequent to the obtaining of such a lien or subsequent to such a purchase\nwhich require the agreement or concurrence of any third party or which\nrequire any further judicial action, or ruling;\n(4) Twenty-one day rule. A transfer of property for or on account of a new and\ncontemporaneous consideration which is deemed under subsection  (2) of this\nsection to be made or suffered after the transfer because of delay in perfecting it\ndoes not thereby become a transfer for or on account of an antecedent debt if any\nacts required by the applicable law to be performed in order to perfect the t ransfer\nas against liens or bona fide purchasers' rights are performed within twenty -one\n(21) days or any period expressly allowed by the law, whichever is less. A transfer\nto secure a future loan, if such a loan is actually made, or a transfer which becom es\nsecurity for a future loan shall have the same effect as a transfer for or on account\nof a new and contemporaneous consideration;\n(5) Indemnifying transfers also voidable. If any lien deemed voidable under paragraph\n(b) of subsection (1) of this section  has been dissolved by the furnishing of a bond\nor other obligation, the surety on which has been indemnified directly or indirectly\nby the transfer of or the creation of a lien upon any property of an insurer before the\nfiling of a petition under this sub title which results in a liquidation order, the\nindemnifying transfer or lien shall also be deemed voidable;\n(6) Avoidance of lien. The property affected by any lien deemed voidable under\nparagraph (b) of subsection (1) of this section and subsection (5) o f this section is\ndischarged from the lien, and that property and any of the indemnifying property\ntransferred to or for the benefit of a surety shall pass to the liquidator, except that\nthe court may on due notice order the lien to be preserved for the be nefit of the\nestate and the court may direct that a conveyance be executed which is adequate to\nevidence the title of the liquidator;\n(7) Hearings to determine rights. The court shall have summary jurisdiction of any\nproceeding by the liquidator to hear an d determine the rights of any parties under\nthis section. Reasonable notice of any hearing in the proceeding shall be given to all\nparties in interest, including the obligee of a releasing bond or other like obligation.\nWhere an order is entered for the re covery of indemnifying property in kind or for\nthe avoidance of an indemnifying lien, the court, upon application of any party in\ninterest, shall in the same proceeding ascertain the value of the property or lien, and\nif the value is less than the amount f or which the property is indemnity or than the\namount of the lien, the transferee or lienholder may elect to retain the property or\nlien upon payment of its value, as ascertained by the court, to the liquidator within\nsuch reasonable times as the court fixes;\n(8) Surety's liability discharged. The liability of a surety under a releasing bond or\nother like obligation shall be discharged to the extent of the value of the\nindemnifying property recovered or the indemnifying lien nullified and avoided or,\nwhere the property is retained under subsection (7) of this section to the extent of\nthe amount paid to the liquidator;\n(9) Setoff of new advances. If a creditor has been preferred and afterward in good faith\ngives the insurer further credit without security of any kind, for property which\nbecomes a part of the insurer's estate, the amount of the new credit remaining\nunpaid at the time of the petition may be set off against the preference which would\notherwise be recoverable from him or her; and\n(10) Federal home  loan bank preferences. A liquidator shall not avoid any preference\narising under, or in connection with, a federal home loan bank security agreement\nor any pledge agreement, security agreement, collateral agreement, guarantee\nagreement, or other similar arrangement or credit enhancement relating to a security\nagreement to which a federal home loan bank is a party.","path":[],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=56208","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:57:55Z","sha256":"bd15783f1ae2432617f459667fa844c0ff4c71fc824c1ac1bf86a3c4331f609b","source_id":"us-ky","stale":false,"prev":"us-ky/krs-304.33-300","next":"us-ky/krs-304.33-320"},"notice":"GroundRules: Original legal text. Not legal advice."}