230 R.I. Code R. 230-RICR-20-45-6.5

Current through November 7, 2024

Section 230-RICR-20-45-6.5 - Commutation Plans

A. Application Procedures

1. Any Applicant that wishes to apply to the Court for an order implementing a Commutation Plan must first submit the Commutation Plan for review by the Department.

2. A Commutation Plan may be submitted by a company that has previously undergone an Insurance Business Transfer Plan that has been approved by the Court.

3. A Commutation Plan may be submitted by a protected cell formed under R.I. Gen. Laws § 27-64-4.

4. The Commutation Plan, submitted for review by the Applicant, should contain all operative provisions. The following items should be included or an explanation provided as to why the particular provision is not included. This list is not exhaustive and other provisions may be included in the commutation plan.

a. Explanation of the Plan

b. Plan Administration, including proposed form and manner of Notice

c. Effect on Creditors

d. Meetings of Creditors

e. Determination of Classes of Creditors

f. Claims Procedures

g. Alternative Solutions

h. Financial Position

i. Actuarial Review

j. Enforcement Provisions

k. Determination of Liabilities

l. Dispute Resolution Procedure

m. Payment of Claims

n. Effect of Insolvency

o. Termination of the Commutation Plan

5. The Department shall have sixty (60) days from the date of its receipt of the Commutation Plan to provide comment on the Commutation Plan to the Applicant.

a. The Department may engage independent consultants, at the Applicant's expense, as set forth in § 6.9(C) of this Part, to assist the Department in its review of the Commutation Plan.

b. If the Department is unable to complete its review within the sixty (60) days it may extend the time by informing the Applicant of the reason for the extension and providing an estimate of the time necessary to complete the review.

c. If the Department determines that it cannot support the Commutation Plan as filed, the Applicant will be so informed and given the opportunity to amend the Commutation Plan to satisfy the concerns of the Department or withdraw the Commutation Plan.

B. Application to the Court

1. Once the Department's comments to the Commutation Plan, if any, are resolved to the satisfaction of the Department, or if the sixty (60) day period set forth in § 6.5(A)(5) of this Part, above and any extension thereto, has passed and the Department has no comments on the Commutation Plan, the Applicant may apply to the Court for an order with a copy of the Petition being provided to the Department:

2. The application shall be in the form of a Petition for Implementation of the Plan in the Providence County Superior Court.

3. Following the filing of the Petition the Applicant may file a motion on the Business Calendar requesting an order:

a. Establishing the classes of Creditors for the purposes of the Meeting of Creditors.

b. Calling a Meeting of Creditors or class of Creditors.

C. Meeting of Creditors

1. Within ninety (90) days of the date the Petition is filed with the Court, or as otherwise directed by the Court upon the Applicant's application, a Meeting of Creditors shall be held to consider the Commutation Plan.

2. Notice of the Meeting shall be pursuant to the Notice provisions of R.I. Gen. Laws § 27-14.5-3 and shall be designed to provide notice of that date and time of the meeting as well as information concerning voting and proxies.

3. All known Creditors and/or representatives of all Classes of Creditors shall be invited to the Meeting

4. Any Creditor that objects to the Commutation Plan, or any aspect thereof, including but not limited to, the schedule for the Meeting of Creditors or the designation of classes of creditors should file any such objection with the Court and serve any such objection within sixty (60) days of the date the Applicant transmits notice of the Court's Order setting the date for the Meeting of Creditors

5. Voting Procedure at the Meeting of Creditors

a. To determine whether the requisite statutory majority to approve the Commutation Plan has been achieved at the Meeting of Creditors, votes will be calculated according to the aggregate amount of claims specified against the Applicant in respect of insurance or reinsurance contracts detailed in the voting form.

b. The Applicant will provide a voting form to all Creditors.

c. The Creditor must submit its voting form within the time, date and other requirements of the Commutation Plan.

d. Only returned voting forms will be considered in order to determine the value of each Creditor's vote at the Meeting of Creditors.

e. The Value to be attributed to each Creditor's claim, for voting purposes only, will be determined on the basis of the information provided by the Creditor in its voting form or the information available to the Applicant from its existing records.

(1) Account will be taken of any known set off or cross claim in relation to any particular Creditor. However, a Creditor's claim will not be reduced by the value of any letter of credit or other form of collateral posted by the Applicant to secure its obligation to the Creditor.

(2) A secured Creditor, or a holder of a promissory note issued by the Applicant, may vote only in respect of the balance, if any, of his claim after deducting the value of his security.

f. If the Applicant agrees on the amount of the Value of a Creditor's claim, for voting purposes only, the amount will be used for the purposes of valuing the relevant Creditor's vote at the Meeting of Creditors.

6. The Chair of the Meeting of Creditors

a. The Chair of the Meeting of Creditors shall be the Plan Administrator unless otherwise selected by Applicant.

b. The Chair of the Meeting of Creditors has the power to admit or reject any Creditor's voting form for the purpose of its entitlement to vote and the power is exercisable with respect to all or part of the voting form.

(1) If the Chair is in doubt whether a voting form should be admitted or rejected, the Chair shall mark the voting form as objected to but allow the Creditor to vote subject to the vote being declared invalid if the objection is ultimately sustained.

(2) If agreement cannot be reached between the Applicant and any Creditor on the amount of the value of a Creditor's claim, for voting purposes only, the Chair of the Meeting of Creditors will determine what he or she considers to be a fair and reasonable value for voting purposes.

(3) Where possible, the Chair will notify the relevant Creditor of his or her decision on valuation for voting purposes before the Meeting of Creditors.

(4) Any Creditor may appeal the Chair's decisions to the Court.

(5) If a Chair's decision is reversed or altered on appeal and the vote is declared invalid, the Court may order a new Meeting of Creditors or such other relief as is appropriate.

7. The Meeting of Creditors shall be stenographically recorded and such recording shall be provided to the Court and the Department in connection with any appeal of a decision at the Meeting of Creditors.

D. Approval of the Commutation Plan

1. The Commutation Plan, as presented by the Applicant at the Meeting of Creditors, shall be considered to be approved and binding on all Creditors of the Applicant if fifty percent in number, representing at least three fourths in value of each Class of Creditors, present and voting either in person or by proxy at the Meeting, agree to the terms and conditions of the Commutation Plan.

2. Within thirty (30) days following the approval of the Commutation Plan at the Meeting of Creditors the Applicant shall file a motion with the Court requesting:

a. If approved, that the Court enter an order confirming the approval of the Commutation Plan;

b. If disapproved, that:

(1) That the Petition be dismissed;

(2) The applicant be given leave to file an amended Commutation Plan.

(a) If an amended Commutation Plan is filed, the Department shall be given an opportunity to review and opine;

(b) If the Department approves the amended Commutation Plan, the Applicant shall proceed to obtain an order from the Court to convene a Meeting of Creditors. If the Court grants approval, the Applicant shall proceed with the Meeting of Creditors.

E. Administration of the Commutation Plan

1. The Applicant, with the approval of the Department, shall appoint such Officers, or a Plan Administrator, as it deems necessary to administer the Commutation Plan

2. The Applicant, or its agent, shall:

a. Within thirty (30) days of the end of each quarter, make quarterly reports to the Department regarding implementation and administration of the Commutation Plan in a form acceptable to the Department with a copy provided to the Court; and

b. Respond to all inquiries of the Department and the Court.

3. All disputes between a Creditor(s) or Class of Creditors and the Applicant will be resolved pursuant to the dispute resolution provisions of the Commutation Plan.

F. Termination of the Commutation Plan

1. The Commutation Plan will terminate as provided in the Commutation Plan documents.

2. Notice of termination of the Commutation Plan will be transmitted as provided in the Commutation Plan.

230 R.I. Code R. 230-RICR-20-45-6.5