Sec. 10.5. (a) If an order for liquidation or rehabilitation of a domestic insurer has been entered, the receiver appointed under the order has a right to recover on behalf of the insurer:
(1) from any parent corporation or holding company or person or affiliate that otherwise controlled the insurer, the amount of distributions other than distributions of shares of the same class of stock paid by the insurer on the insurer's capital stock; or
(2) any payment in the form of a bonus, a termination settlement, or an extraordinary lump sum salary adjustment made by the insurer or the insurer's subsidiaries to a director, an officer, or an employee;
if the distribution or payment described in subdivision (1) or (2) is made at any time during the one (1) year preceding the petition for liquidation, conservation, or rehabilitation, as the case may be, subject to the limitations of subsections (b), (c), and (d).
(b) A distribution is not recoverable if the parent or affiliate shows that, when paid, the distribution was lawful and reasonable and that the insurer did not know and could not reasonably have known that the distribution might adversely affect the ability of the insurer to fulfill the insurer's contractual obligations.
(c) Any person that was a parent corporation or holding company or a person that otherwise controlled the insurer or affiliate at the time distributions described in subsection (a) were paid shall be liable up to the amount of distributions or payments under subsection (a) that the person received. Any person that otherwise controlled the insurer at the time the distributions were declared shall be liable up to the amount of distributions the person would have received if the distributions had been paid immediately. If at least two (2) persons are liable with respect to the same distributions, they are jointly and severally liable.
(d) The maximum amount recoverable under this section shall be the amount needed in excess of all other available assets of the impaired or insolvent insurer to pay the contractual obligations of the impaired or insolvent insurer and to reimburse any guaranty funds.
(e) To the extent that any person liable under subsection (c) is insolvent or otherwise fails to pay claims due from the person, the person's parent corporation or holding company or the person that otherwise controlled the person at the time the distribution was paid is jointly and severally liable for any resulting deficiency in the amount recovered from the parent corporation or holding company or person that otherwise controlled the person.
As added by P.L.130-1994, SEC.32 and P.L.116-1994, SEC.42.