1.  The order of distribution of claims from the estate of the insurer on liquidation of the insurer must be as set forth in this section. Each claim in each class must be paid in full or adequate money retained for the payment before the members of the next class receive any payment. No subclasses may be established within any class. Except as otherwise provided in subsection 2, the order of distribution and of priority must be as follows:

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(a) Administration costs and expenses, including, but not limited to, the following:

(1) The actual and necessary costs of preserving or recovering the assets of the insurer;

(2) Compensation for any services rendered in the liquidation;

(3) Any necessary filing fees;

(4) The fees and mileage payable to witnesses; and

(5) Reasonable attorney’s fees.

(b) All claims under policies, any claims against an insured for liability for bodily injury or for injury to or destruction of tangible property which are covered claims under policies, including any such claims of the Federal Government or any state or local government, and any claims of the Nevada Insurance Guaranty Association, the Nevada Life and Health Insurance Guaranty Association and other similar statutory organizations in other jurisdictions. Any claims under life insurance and annuity policies, whether for death proceeds, annuity proceeds or investment values, must be treated as loss claims. That portion of any loss for which indemnification is provided by other benefits or advantages recovered or recoverable by the claimant may not be included in this class, other than benefits or advantages recovered or recoverable in discharge of familial obligations of support or because of succession at death or as proceeds of life insurance, or as gratuities. No payment made by an employer to an employee of the employer may be treated as a gratuity.

(c) Unearned premiums and small loss claims, including claims under nonassessable policies for unearned premiums or other premium refunds.

(d) Except as otherwise provided in paragraph (b), claims of the Federal Government.

(e) Except as otherwise provided in paragraph (b), claims of any state or local government, including, but not limited to, a claim of a state or local government for a penalty or forfeiture.

(f) Wage debts due employees for services performed, not to exceed an amount equal to 2 months of monetary compensation for each employee for services performed within 6 months before the filing of the petition for liquidation or, if rehabilitation preceded liquidation, within 1 year before the filing of the petition for rehabilitation. Officers of the insurer are not entitled to the benefit of this priority. The priority set forth in this paragraph must be in lieu of any other similar priority authorized by law as to wages or compensation of employees.

(g) Residual classification, including any other claims not falling within other classes pursuant to the provisions of this section. Claims for a penalty or forfeiture must be allowed in this class only to the extent of the pecuniary loss sustained from the act, transaction or proceeding out of which the penalty or forfeiture arose, with reasonable and actual costs occasioned thereby. The remainder of the claims must be postponed to the class of claims specified in paragraph (j).

(h) Judgment claims based solely on judgments. If a claimant files a claim and bases the claim on the judgment and on the underlying facts, the claim must be considered by the liquidator, who shall give the judgment such weight as the liquidator deems appropriate. The claim as allowed must receive the priority it would receive in the absence of the judgment. If the judgment is larger than the allowance on the underlying claim, the remaining portion of the judgment must be treated as if it were a claim based solely on a judgment.

(i) Interest on claims already paid, which must be calculated at the legal rate compounded annually on any claims in the classes specified in paragraphs (a) to (h), inclusive, from the date of the petition for liquidation or the date on which the claim becomes due, whichever is later, until the date on which the dividend is declared. The liquidator, with the approval of the court, may:

(1) Make reasonable classifications of claims for purposes of computing interest;

(2) Make approximate computations; and

(3) Ignore certain classifications and periods as de minimis.

(j) Miscellaneous subordinated claims, with interest as provided in paragraph (i):

(1) Claims subordinated by NRS 696B.430;

(2) Claims filed late;

(3) Portions of claims subordinated pursuant to the provisions of paragraph (g);

(4) Claims or portions of claims the payment of which is provided by other benefits or advantages recovered or recoverable by the claimant; and

(5) Claims not otherwise provided for in this section.

(k) Preferred ownership claims, including surplus or contribution notes, or similar obligations, and premium refunds on assessable policies. Interest at the legal rate must be added to each claim, as provided in paragraphs (i) and (j).

(l) Proprietary claims of shareholders or other owners.

2.  If there are no existing or potential claims of the government against the estate, claims for wages have priority over any claims set forth in paragraphs (c) to (k), inclusive, of subsection 1. The provisions of this subsection must not be construed to require the accumulation of interest for claims as described in paragraph (i) of subsection 1.