On May 8, 2001, the Amended Verified Application for Order Appointing Liquidator and Restraining Orders of applicant Insurance Commissioner of the State of California ("Commissioner") over respondent HIH America Compensation & Liability Insurance Company ("Respondent") came on regularly for hearing in Department 301 of the San Francisco County Superior Court. Deputy Attorneys General David Lew and Anne Michelle Burr appeared on behalf of Applicant. No appearance was made on behalf of Respondent.
The Commissioner has determined that Respondent (a) is insolvent; (b) is in such condition that the further transaction of business by Respondent will be, and is, hazardous to its policyholders, creditors, and the public; and (c) by reason of its insolvency, Respondent does not meet the requirements for issuance to it of a Certificate of Authority.
The Commissioner's status as Conservator is terminated and he is appointed as Liquidator of Respondent, as set forth in Insurance Code section 1016, and directed as Liquidator to liquidate and wind up the business of Respondent and to act in all ways and exercise all powers necessary for the purpose of carrying out such order.
The Commissioner as Liquidator is vested in and to all of the records, property (real and personal, whether owned, leased, rented or utilized by Respondent under any contract or assignment) and assets (including rights under any license or other arrangement for the use of computer software and/or business information systems) of Respondent then in the possession of the Commissioner as Conservator, as well as any records, property and assets of Respondent discovered or obtained hereafter wheresoever such assets may be situated.
The Commissioner as Liquidator is directed to honor as expenses of administration all administrative expenses heretofore incurred and approved by the Commissioner as Conservator and presently unpaid.
All funds and accounts in the name of Respondent, or the Commissioner as Conservator, in various banks or any other institution wheresoever situated shall be Vested in the Commissioner as Liquidator and subject to withdrawal at his direction only and that said order does not convert funds held in a fiduciary capacity to general assets of the Liquidator.
The Commissioner as Liquidator is authorized to appoint and employ estate managers, special deputies and assistants and to give each of them such power and authority as he deems necessary and to compensate them from the assets of Respondent, or from such other non-conservatorship funds as are lawfully available, which as to him shall be determined to be appropriate.
The Commissioner as Liquidator is authorized to invest Respondent's assets as he deems to be in the best interest of this liquidation estate, and to pay for his costs in bringing and maintaining this and other actions necessary to carry out his functions as Liquidator of Respondent from the assets of Respondent, and if there are insufficient funds, is authorized to pay for his costs out of the Insurance Fund, pursuant to Insurance Code section 1035.
The Commissioner is authorized to pay for his costs in bringing and maintaining this action, and such other actions as are necessary to carry out his functions as Liquidator, out of the funds and assets of Respondent.
The Commissioner is authorized, pursuant to Insurance Code section 1037, subdivision (g), to invest and reinvest all assets of Respondent in a manner as he deems to be in the best interest of the creditors of the estate, including investing and reinvesting assets through an investment pool consisting exclusively of assets from conserved estates. To the extent that the Commissioner invests and reinvests through such an investment pool, such investments and reinvestments may exceed $100,000.
The Commissioner is authorized to assume or reject, or to modify, any executory contracts, including without limitation, any lease, rental or utilization contract or agreement (including any schedule to any such contract or agreement), and any license or other arrangement for the use of computer software or business information systems, to which Respondent is a party or as to which Respondent agrees to accept an assignment of such contract. Any such assumption or rejection or modification of any executory Contract shall be effected by the Liquidator not later than within 120 days after the entry of this Order unless such date extended by application to and further order of this Court. All executory contracts that are not expressly assumed by the Commissioner shall be deemed rejected. Any party to a contract that is rejected by the Commissioner pursuant to this Order shall be permitted to file proof of claim against the liquidation estate, which claim shall be treated in accordance with Insurance Code section 1030, et seq.
Pursuant to Insurance Code section 1037, subdivision (d), the Liquidator is authorized to dispose of any excess property of Respondent by any commercially reasonable method, including, but not limited to, sales at public auctions, sales in bulk to the high bidder (provided at least three (3) bids are obtained from independent dealers in the kind of property sold).
The rights and liabilities of claimants, creditors, and all other persons interested in the assets of Respondent, including the State of California, shall be fixed as of the date of entry of the order herein prayed for.
All insurance policies issued by Respondent shall be terminated and canceled effective thirty (30) days following the entry of this Order. The Commissioner as Liquidator shall promptly notify all policyholders of such policy termination and cancellation by First Class Mail at the last known address of the policyholders. In addition, the Liquidator, in his sole discretion, is authorized to terminate and cancel any policies issued by Respondent that are not covered by the preceding sentence or that were issued by a fronting insurer and reinsured, in whole or in part, to Respondent.
All insurance agents working on behalf of Respondent, and all insurance brokers who have done or are doing business on behalf of or with Respondent, are directed to make all remittances of funds collected by them or in their hands directly to the Commissioner as Liquidator, forthwith. This obligation to remit collected funds is continuing in nature.
All prior injunctions and other orders of this Court, except to the extent expressly modified herein, are reaffirmed and remain in full force and effect. All powers and authority granted to the Commissioner as Liquidator under this Order are in addition to and not in limitation of the powers of the Liquidator under the California Insurance Code and any other statutory or applicable case law.
Respondent, its officers, directors, agents and employees and all other persons are enjoined from transacting the business of Respondent and from disposing of any of its California assets or property or any other assets or property of Respondent wheresoever situated.
All persons are enjoined from interfering with the possession, title and rights of the Commissioner, as Liquidator, in and to the assets of Respondent, and from interfering with the conduct of the liquidation and the winding up of the business of Respondent.
All persons are enjoined from instituting or prosecuting or maintaining any action or proceeding at law or suit in equity, including but not limited to matters in arbitration, against Respondent or the Commissioner as Liquidator of Respondent, and from attaching or executing upon, or taking, any legal action against the property held by Respondent without the consent of this Court obtained after reasonable notice to said Liquidator.
All persons are enjoined from obtaining preferences, judgments, attachments or other licenses, or from making any levy against Respondent or its assets without the consent of this Court obtained after reasonable notice to the Commissioner as Liquidator.
All former or present officers, directors, agents and employees of Respondent, and all other persons are directed to deliver all books, records, equipment and other assets of Respondent wheresoever situated to the Commissioner as Liquidator.
Respondent and its respective officers, directors, agents, servants, employees, successors, assigns, affiliates, and other persons or entities under their control and all persons or entities in active concert or participation with them, and each of them, are ordered to turn over to the Commissioner as Liquidator all records, documentation, charts and/or descriptive material of all funds, assets, property owned beneficially or otherwise, and all other assets of Respondent wherever situated, and all books and records of accounts, title documents, leases, rental and utilization agreements and other documents in their possession or under their control, which relate, directly or indirectly, to assets or property of Respondent belonging to or now held by Respondent or any of them or to the business or operations of Respondent.
Except with leave of court issued after a bearing in which the Commissioner as Liquidator has received reasonable notice, all persons are enjoined from executing or issuing or causing the execution or issuance of any court attachment, subpoena, replevin, execution or other process for the purpose of impounding or taking possession of or interfering with or creating or enforcing a lien upon any property owned or in the possession of Respondent or its affiliates, or the Liquidator appointed herein, wheresoever situated.
Except by leave of court obtained after reasonable notice to the Commissioner as Liquidator, all persons are enjoined from accelerating the due date of any obligation or claimed obligation; exercising any right of set-off; taking, retaining, retaking or attempting to retake possession of any real or personal property; withholding or diverting any rent or other obligation; doing any act or other thing whatsoever to interfere with the possession of or management by the Liquidator herein and of the property and assets, owned or controlled by Respondent or in the possession of Respondent or to in any way interfere with said Liquidator or to interfere in any manner during the pendency of this proceeding with the exclusive jurisdiction of this Court over Respondent.
Any and all provisions of any agreement entered into by and between any third party and Respondent, including, by way of illustration, but not limited to, the following types of agreements (as well as any amendments, assignments, or modifications thereof): financial guarantee bonds, promissory notes, loan agreements, security agreements, deeds of trust, mortgages, indemnification agreements, subrogation agreements, subordination agreements, pledge agreements, assignments of rents or other collateral, financial statements, letters of credit, leases, insurance policies, guaranties, escrow agreements, management agreements, real estate brokerage and rental agreements, servicing agreements, consulting agreements, easement agreements, license agreements, franchise agreements, bonus/incentive plans or agreements or employment contracts that provide in any manner that selection, appointment or retention of a liquidator or trustee by any court, or entry of any order such as hereby made, shall be deemed to be, or otherwise operate as, a breach, violation, event of default, termination, event of dissolution, event of acceleration, insolvency, bankruptcy, or liquidation, shall be stayed, and the assertion of any and all rights relating thereto shall also be stayed and barred, except as otherwise ordered by this Court and this Court shall retain jurisdiction over any cause of action that has arisen or may otherwise arise under any such provision.
Any and all claims against Respondent (except those policyholder claims already pending against Respondent, which are deemed filed), including those which in any way affect or seek to affect any of the assets of Respondent, wherever or however such assets may be owned or held, must be filed by no later than December 2, 2001 (the "Claims Bar Date"), together with proper proof thereof, in accordance with the provisions of Insurance Code sections 1010 et seq., including but not limited to section 1023. Any claims not filed by the Claims Bar Date shall be conclusively deemed forever waived.
Nothing in this Order is intended to affect, modify or otherwise alter the jurisdiction of this Court.
Headings contained herein shall not be deemed to govern, limit, modify, or in any manner affect the scope, meaning or intent of the provisions of any part or section of this Order.