Florida Statutes 440.386 – Individual self-insurers’ insolvency; conservation; liquidation
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(1) JURISDICTION OF DELINQUENCY PROCEEDING VENUE; CHANGE OF APPEAL.–
For details, see Fla. Stat. § 775.082(4)(a)
(a) The circuit court shall have original jurisdiction in any delinquency proceeding under this section, and any court with jurisdiction is authorized to make all necessary or proper orders to carry out the purposes of this section.
Attorney's Note
Under the Florida Statutes, punishments for crimes depend on the classification. In the case of this section:| Class | Prison | Fine |
|---|---|---|
| misdemeanor of the first degree | up to 1 year | up to $1,000 |
Terms Used In Florida Statutes 440.386
- Appeal: A request made after a trial, asking another court (usually the court of appeals) to decide whether the trial was conducted properly. To make such a request is "to appeal" or "to take an appeal." One who appeals is called the appellant.
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Compensation: means the money allowance payable to an employee or to his or her dependents as provided for in this chapter. See Florida Statutes 440.02
- Contract: A legal written agreement that becomes binding when signed.
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Deed: The legal instrument used to transfer title in real property from one person to another.
- Department: means the Department of Financial Services; the term does not include the Financial Services Commission or any office of the commission. See Florida Statutes 440.02
- Domestic individual self-insurer: means an individual self-insurer:(a) Which is a corporation formed under the laws of this state;(b) Who is an individual who is a resident of this state or whose primary place of business is located in this state; or(c) Which is a partnership whose principals are residents of this state or whose primary place of business is located in this state. See Florida Statutes 440.02
- Employee: includes any person who is an officer of a corporation and who performs services for remuneration for such corporation within this state, whether or not such services are continuous. See Florida Statutes 440.02
- Equitable: Pertaining to civil suits in "equity" rather than in "law." In English legal history, the courts of "law" could order the payment of damages and could afford no other remedy. See damages. A separate court of "equity" could order someone to do something or to cease to do something. See, e.g., injunction. In American jurisprudence, the federal courts have both legal and equitable power, but the distinction is still an important one. For example, a trial by jury is normally available in "law" cases but not in "equity" cases. Source: U.S. Courts
- Foreign individual self-insurer: means an individual self-insurer:
(a) Which is a corporation formed under the laws of any state, district, territory, or commonwealth of the United States other than this state;(b) Who is an individual who is not a resident of this state and whose primary place of business is not located in this state; or(c) Which is a partnership whose principals are not residents of this state and whose primary place of business is not located in this state. See Florida Statutes 440.02- Individual self-insurer: means any employer who has secured payment of compensation pursuant to…. See Florida Statutes 440.02
- insolvent: means :
(a) With respect to an individual self-insurer:1. See Florida Statutes 440.02- Insurer: means a group self-insurers' fund authorized by…. See Florida Statutes 440.02
- Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- Lien: A claim against real or personal property in satisfaction of a debt.
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Person: means individual, partnership, association, or corporation, including any public service corporation. See Florida Statutes 440.02
- Personal property: All property that is not real property.
- Real property: Land, and all immovable fixtures erected on, growing on, or affixed to the land.
- Self-insurer: means :
(a) Any employer who has secured payment of compensation pursuant to…. See Florida Statutes 440.02- Venue: The geographical location in which a case is tried.
(b) The venue of a delinquency proceeding or summary proceeding against a domestic or foreign individual self-insurer shall be in the Circuit Court of Leon County.(c) An appeal shall be to the District Court of Appeal, First District, from an order granting or refusing liquidation or conservation and from every order in a delinquency proceeding having the character of a final order as to the particular portion of the proceeding embraced therein.(2) COMMENCEMENT OF DELINQUENCY PROCEEDING.–The department or the Florida Self-Insurers Guaranty Association, Incorporated, may commence a delinquency proceeding by application to the court for an order directing the individual self-insurer to show cause why the department or association should not have the relief sought. On the return of such order to show cause, and after a full hearing, the court shall either deny the application or grant the application, together with such other relief as the nature of the case and the interests of the claimants, creditors, stockholders, members, subscribers, or public may require. The department and the association shall give reasonable written notice to each other of all hearings which pertain to an adjudication of insolvency of a member individual self-insurer.(3) GROUNDS FOR LIQUIDATION.–The department or the association may apply to the court for an order appointing a receiver and directing the receiver to liquidate the business of a domestic individual self-insurer if such individual self-insurer is insolvent.(4) GROUNDS FOR CONSERVATION; FOREIGN INDIVIDUAL SELF-INSURERS.–(a) The department or the association may apply to the court for an order appointing a receiver or ancillary receiver, and directing the receiver to conserve the assets within this state, of a foreign individual self-insurer if such individual self-insurer is insolvent.(b) An order to conserve the assets of an individual self-insurer shall require the receiver forthwith to take possession of the property of the receiver within the state and to conserve it, subject to the further direction of the court.(5) PROCEDURE IN LIQUIDATIONS OF INDIVIDUAL SELF-INSURER BY COURT.–(a) In proceedings to liquidate the assets and business of an individual self-insurer, the court shall have power:1. To issue injunctions.2. To appoint a receiver or receivers pendente lite with such powers and duties as the court, from time to time, may direct.3. To take such other proceedings as may be requisite to preserve the individual self-insurer assets, wherever situated, and carry on the business of the individual self-insurer until a full hearing can be held.(b) After a hearing had upon such notice as the court may direct to be given to all parties to the proceedings and to any other parties in interest designated by the court, the court may appoint a liquidating receiver or receivers with authority to collect the assets of the individual self-insurer. Such liquidating receiver or receivers shall have authority, subject to the order of the court, to sell, convey, and dispose of all or any part of the assets of the individual self-insurer, wherever situated, either at public or private sale. The assets of the individual self-insurer or the proceeds resulting from a sale, conveyance, or other disposition thereof shall be applied to the expenses of such liquidation and to the payment of the liabilities and obligations of the individual self-insurer, and any remaining assets or proceeds shall be distributed among its owners or shareholders according to their respective rights and interests. The order appointing such liquidating receiver or receivers shall state their powers and duties. Such powers and duties may be increased or diminished at any time during the proceedings.(c) The court shall have power to allow, from time to time, as expenses of the liquidation, compensation to the receiver or receivers and to the receiver’s attorneys in the proceeding and to direct the payment thereof out of the assets of the individual self-insurer or the proceeds of any sale or disposition of such assets.(d) A receiver of an individual self-insurer appointed under the provisions of this section shall have authority to sue and defend in all courts in her or his own name as receiver of such individual self-insurer. The court appointing such receiver shall have exclusive jurisdiction of the individual self-insurer and its property, wherever situated.(e) The circuit court shall have jurisdiction to appoint an ancillary receiver for the assets and business of such individual self-insurer, to serve ancillary to the receiver for the assets and business of the individual self-insurer acting under orders of a court having jurisdiction to appoint such a receiver for the individual self-insurer, located in any other state, whenever circumstances exist deemed by the court to require the appointment of such ancillary receiver. Such court, whenever circumstances exist deemed by it to require the appointment of a receiver for all the assets in and out of this state, and the business, of a foreign individual self-insurer doing business in this state, in accordance with the ordinary usages of equity, may appoint such a receiver for all its assets in and out of this state, and its business, even though no receiver has been appointed elsewhere. Such receivership shall be converted into an ancillary receivership when deemed appropriate by such circuit court in the light of orders entered by a court of competent jurisdiction in some other state, providing for a receivership of all assets and business of such individual self-insurer.(6) QUALIFICATIONS OF RECEIVERS.–A receiver shall in all cases be a natural person or a corporation authorized to act as receiver, which corporation may be a domestic corporation or a foreign corporation authorized to transact business in this state, and shall in all cases give such bond as the court may direct, with such sureties as the court may require.(7) FILING OF CLAIMS IN LIQUIDATION PROCEEDINGS.–In proceedings to liquidate the assets and business of an individual self-insurer, the court may require all creditors of the individual self-insurer to file with the clerk of the court or with the receiver, in such form as the court may prescribe, proofs under oath of their respective claims. If the court requires the filing of claims, it shall fix a date, which shall be not less than 4 months from the date of the offer, as the last day for filing of claims, and shall prescribe the notice of the date so fixed that shall be given to creditors and claimants. Prior to the date so fixed, the court may extend the time for the filing of claims. Creditors and claimants failing to file proofs of claim on or before the date so fixed may be barred, by order of court, from participating in the distribution of the assets of the individual self-insurer. Nothing in this section affects the enforceability of any recorded mortgage or lien or the perfected security interest or rights of a person in possession of real or personal property.(8) DISCONTINUANCE OF DELINQUENCY PROCEEDINGS.–The liquidation of the assets and business or other delinquency proceedings of an individual self-insurer may be discontinued at any time during the proceedings when it is established that cause for the delinquency proceeding no longer exists. In such event, the court shall dismiss the proceedings and direct the receiver to redeliver to the individual self-insurer all its remaining property and assets.(9) VOIDABLE TRANSFERS.–(a) Any transfer of, or lien upon, the property of an individual self-insurer which is made or created within 4 months prior to the granting of an order to show cause under this section with the intent of giving to any creditor a preference or of enabling the creditor to obtain a greater percentage of her or his debt than any other creditor of the same class, and which is accepted by such creditor having reasonable cause to believe that such preference will occur, shall be voidable.(b) Every director, officer, employee, stockholder, member, subscriber, and any other person acting on behalf of such individual self-insurer who shall be concerned in any such act or deed and every person receiving thereby any property of such individual self-insurer or the benefit thereof shall be personally liable therefor and shall be bound to account to the court.(c) The receiver in any proceeding under this section may avoid any transfer of or lien upon the property of an individual self-insurer which any creditor, stockholder, or subscriber of such individual self-insurer might have avoided and may recover the property so transferred unless such person was a bona fide holder for value prior to the date of the entering of an order to show cause under this chapter. Such property or its value may be recovered from anyone who has received it except a bona fide holder for value as herein specified.(10) TRANSFERS PRIOR TO PETITION.–(a) Every transfer made or suffered and every obligation incurred by an individual self-insurer within 1 year prior to the filing of a successful petition in any delinquency proceeding under this section, upon a showing by the receiver that the same was incurred without fair consideration, or with actual intent to hinder, delay, or defraud either then-existing or future creditors, shall be fraudulent and voidable. However, every such transfer or obligation incurred or suffered within 6 months prior to the filing of the above petition shall be presumed void and fraudulent, with the burden of proof upon the obligee or transferee to show otherwise. This paragraph shall not apply to a person who in good faith is a purchaser, lienor, or obligee, for a present fair equivalent value, but any purchaser, lienor, or obligee who in good faith has given a valuable consideration less than fair for such transfer, lien, or obligation may retain the property, lien, or obligation as a security for repayment. The court may, on due notice, order any such transfer or obligation to be preserved for the benefit of the estate, and in that event the receiver shall succeed to and may enforce the rights of the purchaser, lienor, or obligee.(b) Transfers shall be deemed to have been made or suffered, or obligations incurred, when perfected according to the following criteria:1. A transfer of property other than real property shall be deemed to be made or suffered when it becomes so far perfected that no subsequent lien obtainable by legal or equitable proceedings on a simple contract could become superior to the rights of the transferee.2. A transfer of real property shall be deemed to be made or suffered when it becomes so far perfected that no subsequent bona fide purchaser from the individual self-insurer could obtain rights superior to the rights of the transferee.3. A transfer which creates an equitable lien shall not be deemed to be perfected if there are available means by which a legal lien could be created.4. Any transfer not perfected prior to the filing of a petition in a delinquency proceeding shall be deemed to be made immediately before the filing of a successful petition.Subparagraphs 1.-4. apply whether or not there are or were creditors who might have obtained any liens or persons who might have become bona fide purchasers.
(c) The transferor or obligor individual self-insurer shall record and preserve adequate official memoranda by corporate minutes which shall fully reflect all transactions involving transfers as contemplated by this section of real property or securities of any type and, in the case of all other property or assets, any transfer out of the individual self-insurer’s ordinary course of business. Any person, firm, or corporation, or any officer, director, or employee thereof, who violates this paragraph commits a misdemeanor of the first degree, punishable as provided in s. 775.082 or by a fine of not more than $5,000. Each instance of such violation shall be considered a separate offense.(d) The personal liability of the officers or directors of an insolvent individual self-insurer is subject to part I of chapter 607 and the penalties provided therein.(e) Every transaction of the individual self-insurer with a reinsurer or an excess insurer within 1 year prior to the filing of the petition shall be voidable upon a showing that such transaction was made without fair consideration or with intent to hinder, delay, or defraud either then-existing or future creditors notwithstanding the provisions of subsection (1).(11) TRANSFERS AFTER PETITION.–(a) After the original petition is filed in any delinquency proceeding, a transfer of any of the real property of the individual self-insurer made to a person acting in good faith shall be valid against the receiver if made for a present fair equivalent value, or, if not made for a present fair equivalent value, then to the extent of the present consideration actually paid therefor, for which amount the transferee shall have a lien on the property so transferred. The recording of a copy of the petition for, or order in, any delinquency proceeding with the clerk of the circuit court in the county where any real property in question is located is constructive notice of the commencement of a delinquency proceeding. The exercise by a court of the United States or any state with jurisdiction to authorize or effect a judicial sale of real property of the individual self-insurer within any county in any state shall not be impaired by the pendency of such a proceeding unless the copy is recorded in the county prior to the consummation of the judicial sale.(b) After the original petition for a delinquency proceeding has been filed and before an order of conservation or liquidation is granted:1. A transfer of any of the property of the individual self-insurer, other than real property, made to a person acting in good faith shall be valid against the receiver if made for a present fair equivalent value, or, if not made for a present fair equivalent value, then to the extent of the present consideration actually paid therefor, for which amount the transferee shall have a lien on the property so transferred.2. A person indebted to the individual self-insurer or holding property of the individual self-insurer may, if acting in good faith, pay the indebtedness or deliver the property or any part thereof to the individual self-insurer or upon her or his order, with the same effect as if the petition were not pending.(c) A person having actual knowledge of the pending delinquency proceeding shall be deemed not to act in good faith.(d) A person asserting the validity of a transfer under this subsection has the burden of proof. Except as elsewhere provided in this subsection, any transfer by or in behalf of the individual self-insurer after the date of filing of the original petition in any delinquency proceeding requesting the appointment of a receiver by any person other than the receiver is not valid against the receiver.(e) Nothing in this section shall impair the negotiability of currency or negotiable instruments.(12) JUDGMENT OF INVOLUNTARY DISSOLUTION; ENTRY; FILING.–(a) In proceedings to liquidate the assets and business of an individual self-insurer which is a corporation, when the costs and expenses of such proceedings and all debts, obligations, and liabilities of the corporation shall have been paid and discharged and all of its remaining property and assets distributed to its shareholders or, in case its property and assets are not sufficient to satisfy and discharge such costs, expenses, debts, and obligations, all the property and assets have been applied so far as they will go to their payment, the court shall enter a judgment dissolving the corporation, whereupon the existence of the corporation shall cease.(b) In case the court shall enter a judgment dissolving a corporation, it shall be the duty of the clerk of such court to cause a certified copy of the judgment to be filed with the Department of State. No fee shall be charged by the Department of State for the filing thereof.(13) GUARANTY FUND; ORDERS OF COURT.–Any delinquency order issued pursuant to this section shall authorize and direct the receiver to coordinate the operation of the receivership with the operation of the Florida Self-Insurers Guaranty Association, Incorporated. Such authorization shall include, but not be limited to, release of copies of any of the following:(a) Workers’ compensation claims files, records, or documents pertaining to workers’ compensation claims on file with the insolvent individual self-insurer.(b) Workers’ compensation claims filed with the receiver.