33-7-120. Injunction -- liquidation -- receivership of domestic society. (1) The commissioner of insurance shall notify a domestic society of a deficiency or deficiencies and state in writing the reasons for the dissatisfaction, whenever the commissioner, upon investigation, finds that the society:
(a) has exceeded its powers;
(b) has failed to comply with any provision of this chapter;
(c) is not fulfilling its contracts in good faith;
(d) has a membership of less than 400 after an existence of 1 year or more; or
(e) is conducting business fraudulently or in a manner hazardous to its members, creditors, the public, or the business.
(2) Whenever a deficiency or deficiencies are found, the commissioner shall issue to the society a written notice that requires the deficiency or deficiencies to be corrected. The society shall within 30 days comply with the commissioner's request for correction. If the society fails to comply, the commissioner shall notify the society of the noncompliance and require the society to show cause by a stated date why it should not be enjoined from transacting business until the violation complained of is corrected or why an action in quo warranto should not be commenced against the society.
(3) If the society does not present sufficient reasons why it should not be enjoined from transacting business or why the quo warranto action should not be commenced, the commissioner may present the facts relating to the commissioner's determination to the attorney general who shall, if the attorney general finds that the circumstances warrant, commence an action to enjoin the society from transacting business or an action in quo warranto.
(4) The court shall notify the officers of the society of a hearing. If after a hearing it appears that the society should be enjoined or liquidated or that a receiver should be appointed, the court shall enter the necessary order. A society enjoined from transacting business may not do business until:
(a) the commissioner finds that the violation complained of has been corrected;
(b) the costs of the action have been paid by the society if the court finds that the society was in default as charged;
(c) the court has dissolved its injunction; and
(d) the commissioner has reinstated the certificate of authority.
(5) If the court orders the society liquidated, it is enjoined from transacting any further business. The receiver of the society shall proceed at once to take possession of the books, papers, money, and other assets of the society and, under the direction of the court, proceed to close the affairs of the society and distribute its funds to those entitled to the funds.
(6) An action under this section may not be recognized in any court of this state unless brought by the attorney general upon request of the commissioner. The court shall appoint the commissioner as the receiver for a domestic society.
(7) The provisions of this section relating to hearing by the commissioner, action by the attorney general at the request of the commissioner, hearing by the court, injunction, and receivership apply to a society that voluntarily decides to discontinue business.
History: En. Sec. 30, Ch. 586, L. 1991; amd. Sec. 1169, Ch. 56, L. 2009.