Wis. Stat. § 645.54 - Voidable preferences and liens

• Cite as: Wis. Stat. § 645.54

(1) PREFERENCES.

(a) Preference defined. A preference is a transfer of any of the property of an insurer to or for the benefit of a creditor, for or on account of an antecedent debt, made or suffered by the insurer within one year before the filing of a successful petition for liquidation under this chapter the effect of which transfer may be to enable the creditor to obtain a greater percentage of his or her debt than another creditor of the same class would receive. If a liquidation order is entered while the insurer is already subject to a rehabilitation order, transfers otherwise qualifying shall be deemed preferences if made or suffered within one year before the filing of the successful petition for rehabilitation or within 2 years before the filing of the successful petition for liquidation, whichever time is shorter.

(b) Invalidation of preferences.

1. Any preference may be avoided by the liquidator, if any of the following conditions is met:

a. The insurer was insolvent at the time of the transfer.

b. The transfer was made within 4 months before the filing of the petition.

c. The creditor receiving the preference or to be benefited thereby or his or her agent acting with reference thereto had reasonable cause to believe at the time when the transfer was made that the insurer was insolvent or was about to become insolvent.

d. The creditor receiving the preference was an officer, employee, attorney or other person who was in fact in a position of comparable influence in the insurer to an officer whether or not he or she held such position, or any shareholder holding directly or indirectly more than 5 percent of any class of any equity security issued by the insurer, or any other person with whom the insurer did not deal at arm's length.

2. If a preference is voidable, the liquidator may recover the property or, if the property has been converted, the liquidator may recover its value from any person who has received or converted the property, except a bona fide purchaser from or lienor of the debtor's transferee for a present fair equivalent value. If the bona fide purchaser or lienor has given less than fair equivalent value, he or she shall have a lien upon the property to the extent of the consideration actually given by him or her. If a preference by way of lien or security title is voidable, the court may on due notice order the lien or title to be preserved for the benefit of the estate, in which event the lien or title shall pass to the liquidator.