The priority of claims and order of distribution of the insurer's assets on liquidation shall be as stated in this section. The first fifty dollars ($50.00) of the amount allowed on each property, casualty or fidelity claim in the classes under Subsections B through F of this section, shall be deducted from the claim and included in the class under Subsection I of this section. Claims may not be cumulated by assignment to avoid application of the fifty dollar ($50.00) deductible provision. Subject to the fifty dollar ($50.00) deduction, every claim in each class shall be paid in full or adequate funds retained for payment before the members of the next class receive any payment. No subclasses shall be established within any class. Subject to the foregoing, the order of distribution and of priority shall be as follows:
A. administration costs. The costs and expenses of administration, including but not limited to the actual and necessary costs of preserving or recovering the assets of the insurer, compensation for all services rendered in the liquidation, necessary filing fees, fees and mileage payable to witnesses, attorney's fees in reasonable amount and the reasonable expenses of a guaranty association for unallocated loss adjustment expense;
B. wages. Debts due to employees of the insurer for services performed, not to exceed one thousand dollars ($1,000) to each employee, and earned within three months before commencement of delinquency proceedings. The insurer's officers shall not be entitled to the benefit of this priority. Such priority shall be in lieu of any other similar priority authorized by law as to wages or compensation of employees;
C. loss claims. All claims under policies or contracts for losses incurred, including third party claims and all claims of guaranty associations not specified in Subsection A of this section. That portion of any loss for which indemnification is provided by other benefits or advantages recovered or recoverable by the claimant shall not be included in this class, other than benefits or advantages recovered or recoverable in discharge of familial obligations of support or by way of succession at death or as proceeds of life insurance, or as gratuities. No payment made by an employer to his employee shall be treated as a gratuity;
D. unearned premiums. Claims under nonassessable policies for unearned premiums or other premium refunds;
E. residual classification. All other claims, including claims of the federal or any state or local government, not falling within other classes under this section. Claims, including those of any governmental body, for a penalty or forfeiture, shall 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 such claims shall be postponed to the class of claims under Subsection K of this section;
F. judgments. Claims based solely on judgments. If a claimant files a claim and bases it both on the judgment and on the underlying facts, the claim shall be considered by the liquidator, who shall give the judgment such weight as he deems appropriate. The claim as allowed shall receive the priority it would receive in absence of the judgment. If the judgment is larger than the allowance on the underlying claim, the remaining portion of the judgment shall be treated as if it were a claim based solely on a judgment, except that, to the extent such judgment was obtained through fraud or collusion, it shall be disallowed;
G. interest on claims already paid. Interest at the legal rate compounded annually on all claims in the classes under Subsections A through I of this section, from date of 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 court's approval, may make reasonable classifications of claims for purposes of computing interest, may make approximate computations and may ignore certain classifications and time periods as de minimis;
H. miscellaneous subordinated claims. The remaining claims or portions of claims not already paid, with interest as in Subsection G of this section:
(1) the first fifty dollars ($50.00) of each claim in the classes under Subsections B through F of this section, subordinated under this section;
(2) claims subordinated by Section 59A-41-45 NMSA 1978;
(3) claims filed late except as provided otherwise in Subsection C of Section 59A-41-41 NMSA 1978;
(4) portions of claims subordinated under Subsection E of this section;
(5) claims or portions of claims payment of which is provided by other benefits or advantages recovered or recoverable by the claimant; and
(6) claims not otherwise provided for in this section;
I. preferred ownership claims. Surplus or contribution notes, or similar obligations, and premium refunds on assessable policies. Interest at the legal rate shall be added to each claim, as in Subsections G and H of this section; and
J. proprietary claims. The claims of shareholders or other owners.
History: Laws 1984, ch. 127, § 736; 1993, ch. 320, § 97.
Compiler's notes. — Paragraph E contains a reference to a Paragraph K; however, as enacted and amended, this section does not contain a Paragraph K.
The 1993 amendment, effective June 18, 1993, in the introductory language, deleted the next-to-last sentence, which related to funds to be reserved where a guaranty association is obligated as to the insurer's claims; added the language beginning "and the reasonable expenses" at the end of Subsection A; rewrote the first sentence in Subsection C; rewrote Subsection D; added the language beginning "except that" at the end of Subsection F; in Subsection H, substituted "Section 59A-41-45 NMSA 1978" for "Section 737 of this article" in Paragraph (2), and added the language beginning "except as provided" in Paragraph (3); substituted references to "subsections" for references to "paragraphs" throughout the section; and made stylistic changes throughout the section.
Am. Jur. 2d, A.L.R. and C.J.S. references. — 43 Am. Jur. 2d Insurance § 135.
44 C.J.S. Insurance § 200 et seq.
Structure New Mexico Statutes
Article 41 - Conservation, Rehabilitation and Liquidation
Section 59A-41-1 - Short title.
Section 59A-41-2 - Scope of article.
Section 59A-41-3 - Definitions.
Section 59A-41-4 - "Ancillary state" defined.
Section 59A-41-5 - "Creditor" defined.
Section 59A-41-6 - "Delinquency proceeding" defined.
Section 59A-41-7 - "Domiciliary state" defined.
Section 59A-41-8 - "Foreign country" defined.
Section 59A-41-9 - "General assets" defined.
Section 59A-41-10 - "Impairment" defined.
Section 59A-41-11 - "Insolvency" defined.
Section 59A-41-12 - "Preferred claim" defined.
Section 59A-41-13 - "Receiver" defined.
Section 59A-41-14 - "Reciprocal state" defined.
Section 59A-41-15 - "Secured claim" defined.
Section 59A-41-16 - "Special deposit claim" defined.
Section 59A-41-17 - Uniform Insurers Liquidation Act; composition, severability and interpretation.
Section 59A-41-18 - Conduct of delinquency proceedings against domestic insurers.
Section 59A-41-20 - Filing, proving claims of nonresidents against delinquent domestic insurers.
Section 59A-41-22 - Priority of preferred claims, special deposit claims and secured claims.
Section 59A-41-23 - Attachment, garnishment of assets.
Section 59A-41-24 - Hazardous financial condition; determination.
Section 59A-41-25 - Requirements of insurer in hazardous financial condition.
Section 59A-41-26 - Hazardous financial condition; failure of insurer to comply with requirements.
Section 59A-41-27 - Deposit of foreign insurer during examination; impoundment of assets.
Section 59A-41-28 - Grounds for rehabilitation, liquidation of domestic insurer.
Section 59A-41-29 - Order of rehabilitation; termination.
Section 59A-41-30 - Order of liquidation of domestic insurer; rights, liabilities.
Section 59A-41-31 - Grounds for conservation of assets of foreign insurer.
Section 59A-41-32 - Order of conservation or ancillary liquidation of foreign or alien insurer.
Section 59A-41-33 - Grounds for dissolution of domestic insurer.
Section 59A-41-34 - Commencement of a delinquency proceeding.
Section 59A-41-35 - Change of venue.
Section 59A-41-36 - Right of guaranty association to participate in delinquency proceeding.
Section 59A-41-37 - Exemption from filing fees.
Section 59A-41-38 - Deposit of monies collected.
Section 59A-41-39 - Borrowing on pledge of assets.
Section 59A-41-40 - Sale, disposition of assets and compromise of certain claims.
Section 59A-41-41 - Time to file claims.
Section 59A-41-42 - Fraudulent transfers prior to petition.
Section 59A-41-43 - Fraudulent transfer after petition.
Section 59A-41-43.1 - Voidable preferences and liens.
Section 59A-41-43.2 - Liability for participation in fraudulent transfer or voidable preference.
Section 59A-41-43.3 - Claims of holders of void or voidable rights.
Section 59A-41-44 - Priorities in distribution.
Section 59A-41-45.1 - Recovery from affiliates.
Section 59A-41-46 - Report for assessment; domestic mutual, reciprocal insurers.
Section 59A-41-47 - Levy of assessment; domestic mutual, reciprocal insurers.
Section 59A-41-48 - Order for payment of assessment; domestic mutual, reciprocal insurers.
Section 59A-41-49 - Assessment order, publication and transmittal.
Section 59A-41-50 - Judgment upon the assessment.
Section 59A-41-51 - Summary proceedings; superintendent's corrective orders authorized.
Section 59A-41-52 - Summary proceedings; appeal from superintendent's order.
Section 59A-41-53 - Summary proceedings; enforcement; penalty.
Section 59A-41-54 - Summary proceedings; seizure under court order.
Section 59A-41-55 - Summary proceedings; seizure under superintendent's order.
Section 59A-41-56 - Summary proceedings; conduct of administrative and judicial hearings.
Section 59A-41-57 - Summary proceedings; penalty for refusal to deliver property, records.