Title 9. Impaired Entities — Subtitle 2. Liquidation, Rehabilitation, Reorganization, and Conservation
Statutes in effect as of October 1, 2026.
Md. Code Ann., Ins. § 9-201 (2026)
Title 9. Impaired Entities
Subtitle 2. Liquidation, Rehabilitation, Reorganization, and Conservation
§ 9–201LinkCopy Citation
(a)
In this subtitle the following words have the meanings indicated.
(b)
“Ancillary state” means a state other than a domiciliary state.
(c)
“Creditor” means a person with a claim against an impaired insurer.
(d)
“Delinquency proceeding” means a proceeding under this subtitle to liquidate, rehabilitate, reorganize, or conserve an insurer or other entity subject to this subtitle.
(e)
“Domiciliary state” means:
(1)
the state in which an insurer is incorporated or organized; or
(2)
the state of entry of an alien insurer.
(f)
“Federal home loan bank” means a federal home loan bank established under the Federal Home Loan Bank Act, 12 U.S.C. §§ 1421 through 1449.
(g)
“Foreign country” means territory outside of any state.
(h)
“General assets” means:
(1)
all property that is not specifically mortgaged, pledged, deposited, or otherwise encumbered for the security or benefit of specified persons or a limited class of persons;
(2)
to the extent that property of an insurer is specifically encumbered, the amount of the property or its proceeds that exceeds the amount necessary to discharge the encumbrance; and
(3)
assets held in trust and assets held on deposit for the security or benefit of all policyholders and creditors in the United States.
(i)
“Impaired insurer” means:
(1)
a stock insurer whose assets, less all liabilities and required reserves, do not equal or exceed the capital stock and surplus required for authority to engage in insurance business as a stock insurer;
(2)
a mutual insurer, reciprocal insurer, dental plan organization, or nonprofit health service plan whose assets, less liabilities and required reserves, do not equal or exceed the minimum surplus required under this article for authority to engage in insurance business as a mutual insurer, reciprocal insurer, dental plan organization, or nonprofit health service plan; or
(3)
as determined by the Commissioner, an insurer that does not have the financial ability to pay an obligation within 30 days after it becomes due.
(j)
“Insurance business” includes any of the acts of an insurance business specified in § 4–205 of this article.
(k)
“Insurer–member” means an insurer that is a member of a federal home loan bank.
(l)
“Receiver” includes a conservator, rehabilitator, and liquidator.
(m)
“Reciprocal state” means a state other than this State in which the substance and effect of the provisions of this subtitle are in force, including the requirement that the Commissioner or equivalent insurance supervisory official be the receiver of an insurer subject to a delinquency proceeding and a provision for avoidance of fraudulent conveyances and preferential transfers.
(n)
(1)
“Secured claim” means a claim that:
(i)
is secured by mortgage, trust deed, pledge, deposit as security, escrow, or otherwise; or
(ii)
has become a lien on specific assets through judicial process.
(2)
“Secured claim” does not include a special deposit claim or a claim against general assets.
(o)
(1)
“Special deposit claim” means a claim secured by a deposit required by law for the security or benefit of a limited class of persons.
(2)
“Special deposit claim” does not include a claim against general assets.
(p)
(1)
Except as provided in paragraph (2) of this subsection, “state” means a state of the United States, the District of Columbia, or Puerto Rico.
(2)
When capitalized, “State” means Maryland.
(q)
“Transfer” means:
(1)
the sale or other direct or indirect disposition of property or an interest in property;
(2)
the fixing of a lien on property or an interest in property; or
(3)
the retention of a security title to property delivered to a debtor.
Md. Code Ann., Ins. § 9-202 (2026)
Title 9. Impaired Entities
Subtitle 2. Liquidation, Rehabilitation, Reorganization, and Conservation
§ 9–202LinkCopy Citation
(a)
Sections 9-201(b), (d), (e), (f), (g), (j), (k), (l), (m), and (n), 9-203, 9-207(a), 9-218, 9-219, 9-220, 9-226(f) and (g), and 9-227(a), (e), (f), (g), (h), and (i) of this subtitle are the “Uniform Insurers Liquidation Act”.
(b)
(1)
The Uniform Insurers Liquidation Act shall be interpreted and construed to effectuate its general purpose to make uniform the laws of those states that enact it.
(2)
To the extent that a provision of the Uniform Insurers Liquidation Act conflicts with other provisions of this subtitle, the provision of the Uniform Insurers Liquidation Act controls.
Md. Code Ann., Ins. § 9-203 (2026)
Title 9. Impaired Entities
Subtitle 2. Liquidation, Rehabilitation, Reorganization, and Conservation
§ 9–203LinkCopy Citation
(a)
This subtitle applies to a person that:
(1)
has done, purports to do, is doing, or is licensed to do an insurance business; and
(2)
is subject to the insurance supervisory authority of, or to liquidation, rehabilitation, reorganization, or conservation by, the Commissioner or equivalent insurance supervisory official of another state.
(b)
The provisions of this subtitle that apply to insurers also apply to:
(1)
a corporation that operates a nonprofit health service plan under Title 14, Subtitle 1 of this article;
(2)
an insurer that is doing or has done insurance business in the State and against whom claims arising from that insurance business may exist now or in the future;
(3)
a person that purports to do insurance business in the State;
(4)
an insurer that has an insured resident or located in the State;
(5)
a person organized or in the process of organizing with intent to do insurance business in the State; and
(6)
a person that does, or has done, any of the acts of an insurance business specified in § 4-205 of this article.
Md. Code Ann., Ins. § 9-204 (2026)
Title 9. Impaired Entities
Subtitle 2. Liquidation, Rehabilitation, Reorganization, and Conservation
§ 9–204LinkCopy Citation
A delinquency proceeding is the exclusive method of liquidating, rehabilitating, reorganizing, or conserving an insurer.
Md. Code Ann., Ins. § 9-205 (2026)
Title 9. Impaired Entities
Subtitle 2. Liquidation, Rehabilitation, Reorganization, and Conservation
§ 9–205LinkCopy Citation
The Commissioner, deputy commissioner, special deputy commissioner, or any person acting as receiver in a rehabilitation, liquidation, or conservation as a result of a court order issued on or after January 1, 1985, shall have the immunity from liability described in § 5-410 of the Courts Article.
Md. Code Ann., Ins. § 9-206 (2026)
Title 9. Impaired Entities
Subtitle 2. Liquidation, Rehabilitation, Reorganization, and Conservation
§ 9–206LinkCopy Citation
(a)
(1)
This subsection applies even if a paper or instrument:
(i)
is not executed by the Commissioner or a deputy, employee, or attorney of record of the Commissioner; and
(ii)
is not connected with the commencement of an action or proceeding by or against the Commissioner or with the subsequent conduct of the action or proceeding.
(2)
Subject to subsection (b) of this section, the Commissioner may not be required to pay to a public officer in the State a fee for filing, recording, or issuing a transcript or certificate or for authenticating a paper or instrument that relates to the exercise by the Commissioner of a power or duty of the Commissioner under this subtitle.
(b)
(1)
The Commissioner or deputy commissioner, when acting as receiver or ancillary receiver under this subtitle, shall pay all court costs out of the assets of the insurer before any distribution to creditors or termination of rehabilitation.
(2)
In all cases, these costs and those specified in subsection (a) of this section shall:
(i)
be charged in the accounts of the Commissioner to the court; or
(ii)
be paid by the insurer as a condition of termination of the action or proceeding.
Md. Code Ann., Ins. § 9-207 (2026)
Title 9. Impaired Entities
Subtitle 2. Liquidation, Rehabilitation, Reorganization, and Conservation
§ 9–207LinkCopy Citation
(a)
(1)
In a delinquency proceeding in which the Commissioner has been appointed receiver, the Commissioner may:
(i)
appoint one or more special deputy commissioners to act for the Commissioner; and
(ii)
employ counsel, clerks, and assistants.
(2)
Compensation of the special deputies, counsel, clerks, and assistants and all expenses of taking possession of the insurer and of conducting the delinquency proceeding:
(i)
shall be set by the Commissioner, subject to approval by the court; and
(ii)
shall be paid out of the assets or funds of the insurer.
(3)
Within the limits of duties imposed on a special deputy concerning a delinquency proceeding, the special deputy:
(i)
shall possess all powers given to the receiver; and
(ii)
in the exercise of those powers, is subject to all the duties imposed on the receiver concerning the delinquency proceeding.
(b)
In a civil proceeding filed against a special deputy commissioner appointed under this subtitle, the special deputy commissioner is entitled to representation by the Attorney General as specified in Title 12, Subtitle 3, Part II of the State Government Article.
Md. Code Ann., Ins. § 9-208 (2026)
Title 9. Impaired Entities
Subtitle 2. Liquidation, Rehabilitation, Reorganization, and Conservation
§ 9–208LinkCopy Citation
A delinquency proceeding may be brought against:
(1)
an insurer that is doing or has done insurance business in the State and against whom claims arising from that insurance business may exist now or in the future;
(2)
a person that purports to do insurance business in the State;
(3)
an insurer that has insureds resident or located in the State;
(4)
a person organized, or in the process of organizing, with intent to do insurance business in the State;
(5)
a corporation that operates a nonprofit health service plan under Title 14, Subtitle 1 of this article; and
(6)
a person that does, or has done, any of the acts of an insurance business specified in § 4-205 of this article.
Md. Code Ann., Ins. § 9-209 (2026)
Title 9. Impaired Entities
Subtitle 2. Liquidation, Rehabilitation, Reorganization, and Conservation
§ 9–209LinkCopy Citation
(a)
The Circuit Court of Baltimore City:
(1)
has exclusive original jurisdiction over delinquency proceedings; and
(2)
may issue all necessary and proper orders to carry out this subtitle.
(b)
If service is made in accordance with the Maryland Rules or other applicable law, a court with subject matter jurisdiction over an action brought under this subtitle also has jurisdiction over:
(1)
a person, including an insurance producer and another person that has written policies, that has acted in any manner on behalf of an insurer against which a delinquency proceeding has been commenced, in an action resulting from or incidental to the person’s relationship with the insurer;
(2)
a reinsurer that at any time has entered into a contract of reinsurance with an insurer against which a delinquency proceeding has been commenced, or an insurance producer for the reinsurer, in an action on or incidental to the reinsurance contract;
(3)
an officer, director, manager, trustee, organizer, promoter, or attorney in fact of an insurer against which a delinquency proceeding has been commenced, in an action resulting from or incidental to the person’s relationship with the insurer;
(4)
a person that, at the time of or after commencement of the delinquency proceeding, held or was in control of assets in which the receiver claims an interest on behalf of the insurer, in an action concerning the assets; and
(5)
a person obligated to the insurer in any way, in an action on or incidental to the obligation.
(c)
The venue of all delinquency proceedings is in Baltimore City.
Md. Code Ann., Ins. § 9-210 (2026)
Title 9. Impaired Entities
Subtitle 2. Liquidation, Rehabilitation, Reorganization, and Conservation
§ 9–210LinkCopy Citation
(a)
The Commissioner shall commence a delinquency proceeding against an insurer by applying to the court for an order that directs the insurer to show cause why the court should not grant the relief requested.
(b)
(1)
The court may consider an application for commencement of a delinquency proceeding only if the application is filed by the Commissioner in the name of the State.
(2)
After a hearing under the terms of the show–cause order, the court:
(i)
shall either grant or deny the application; and
(ii)
may order other relief as the nature of the case and the interests of the policyholders, creditors, stockholders, members, subscribers, or the public may require.
Md. Code Ann., Ins. § 9-211 (2026)
Title 9. Impaired Entities
Subtitle 2. Liquidation, Rehabilitation, Reorganization, and Conservation
§ 9–211LinkCopy Citation
(a)
The Commissioner may apply to the court for an order that directs the Commissioner to conserve or rehabilitate a domestic insurer or an alien insurer domiciled in the State, if the domestic insurer or alien insurer:
(1)
is an impaired insurer;
(2)
has refused to submit to the Commissioner or a deputy or examiner of the Commissioner, for reasonable examination, any of the property, books, records, accounts, or affairs of the insurer, or of a subsidiary or related company of the insurer within the insurer’s control;
(3)
has concealed or removed its assets or records;
(4)
has failed to comply with an order of the Commissioner to make good an impairment of capital or surplus or both;
(5)
without first obtaining the written approval of the Commissioner:
(i)
has transferred or attempted to transfer substantially all of its property or business; or
(ii)
has entered into a transaction that merges, consolidates, or reinsures substantially all of its property or business in or with the property of another insurer;
(6)
has willfully violated its charter, articles of incorporation, a State law, or an order of the Commissioner;
(7)
after reasonable notice, has failed promptly and effectively to terminate the employment, status, and influence over the management of the insurer of a person that has executive authority in fact over the insurer and has refused to be examined under oath about the affairs of the insurer in the State or elsewhere;
(8)
has been or is the subject of an application for appointment of a receiver, trustee, custodian, sequestrator, or similar fiduciary of the insurer or its property in an action not filed under this article, regardless of whether the appointment:
(i)
has been made;
(ii)
might deny the courts of the State of jurisdiction; or
(iii)
might prejudice an orderly delinquency proceeding under this subtitle;
(9)
has consented to the order for conservation or rehabilitation through a majority of its directors, stockholders, members, or subscribers;
(10)
has failed to pay a final judgment rendered against it in the State on an insurance contract issued or assumed by the insurer, within 60 days after the latest of:
(i)
the day on which the judgment became final;
(ii)
the day on which the time for taking an appeal expired; and
(iii)
the day on which an appeal was dismissed before final termination;
(11)
after examination by the Commissioner, is found to be in a condition in which further transaction of its business will be hazardous to its policyholders, bondholders, creditors, or the public;
(12)
has failed to remove a person that has executive authority in fact over the insurer after the Commissioner has found that person to be dishonest or untrustworthy in a manner that might affect the business of the insurer;
(13)
has reasonable cause to know, or should know, that there has been:
(i)
embezzlement from the insurer;
(ii)
wrongful sequestration or diversion of assets of the insurer;
(iii)
forgery or fraud that affects the insurer; or
(iv)
other illegal conduct in, by, or with respect to the insurer;
(14)
is controlled directly or indirectly by a person that the Commissioner finds to be untrustworthy; or
(15)
has failed to file a financial report required by law within the time allowed by law and, after written demand by the Commissioner, has failed to give an immediate adequate explanation.
(b)
(1)
If the appointment of the Commissioner as receiver is not then in effect, and even if no previous order has directed the Commissioner to rehabilitate a domestic insurer or the United States branch of an alien insurer that has trusteed assets in the State, the Commissioner may apply to the court for an order that appoints the Commissioner as receiver and that directs the Commissioner to liquidate the business of the domestic insurer or the United States branch of the alien insurer if the domestic insurer or alien insurer:
(i)
has not done business for at least 1 year;
(ii)
is an impaired insurer and has commenced voluntary liquidation or dissolution, or attempts to commence or prosecute an action or proceeding to liquidate its business or affairs, to dissolve its corporate charter, or to procure the appointment of a receiver, trustee, custodian, or sequestrator under any law except this article;
(iii)
is doing business in a fraudulent manner; or
(iv)
is in a condition in which further rehabilitation efforts on any grounds specified in subsection (a) of this section appear to be futile.
(2)
If at any time during a rehabilitation proceeding the Commissioner determines that further efforts to rehabilitate the domestic insurer or alien insurer would be useless, the Commissioner may apply to the court for an order of liquidation.
(c)
The Commissioner may apply to the court for an order that appoints the Commissioner as receiver or ancillary receiver, and that directs the Commissioner to conserve the assets of a foreign insurer that are located in the State:
(1)
on any ground specified in subsection (a) or (b) of this section; or
(2)
on the ground that the assets of the foreign insurer have been sequestrated in the jurisdiction in which the foreign insurer is domiciled or in another jurisdiction.
(d)
The Commissioner may apply to the court for an order that appoints the Commissioner as receiver or ancillary receiver, and that directs the Commissioner to conserve the assets of an alien insurer that are located in the State:
(1)
on any ground specified in subsection (a) or (b) of this section;
(2)
on the ground that the alien insurer has failed to comply within the time designated by the Commissioner with an order of the Commissioner to make good an impairment of the trusteed funds of the alien insurer; or
(3)
on the ground that the assets of the alien insurer have been sequestrated in the jurisdiction in which the alien insurer is domiciled or in another jurisdiction.
(e)
The Commissioner may apply to the court for an order that appoints the Commissioner as ancillary receiver and that directs the Commissioner to liquidate the business of a foreign insurer that has assets, business, or claims in this State on appointment in the domiciliary state of the foreign insurer of a receiver or other officer by whatever name called to liquidate the business of the foreign insurer.
Md. Code Ann., Ins. § 9-212 (2026)
Title 9. Impaired Entities
Subtitle 2. Liquidation, Rehabilitation, Reorganization, and Conservation
§ 9–212LinkCopy Citation
(a)
(1)
An order to rehabilitate a domestic insurer, or an alien insurer domiciled in the State, shall:
(i)
appoint the Commissioner as rehabilitator;
(ii)
direct the Commissioner:
(1)
to take possession of the property of the insurer and conduct the business of the insurer under the general supervision of the court; and
(2)
to take action as the court directs to remove the causes and conditions that have made rehabilitation necessary;
(iii)
vest title to all property of the insurer in the rehabilitator; and
(iv)
require the rehabilitator to make accountings to the court that:
(1)
are at intervals as the court specifies in its order, but not less frequently than two times each year; and
(2)
include the opinion of the rehabilitator about the likelihood of success of the rehabilitation.
(2)
Issuance of an order of rehabilitation:
(i)
does not constitute an anticipatory breach of any contract of the insurer; and
(ii)
is not grounds for retroactive revocation or retroactive cancellation of a contract of the insurer, unless the rehabilitator revokes or cancels the contract.
(b)
(1)
Subject to paragraph (2) of this subsection, the Commissioner, or an interested person on due notice to the Commissioner, may apply to the court at any time for an order that:
(i)
terminates a rehabilitation proceeding; and
(ii)
allows the insurer to resume possession of its property and the conduct of its business.
(2)
An order under this subsection may not be issued unless, after a hearing, the court determines that:
(i)
the purposes of the rehabilitation proceeding have been fully accomplished; and
(ii)
§ 9-223 of this subtitle has been satisfied.
(c)
(1)
An order to liquidate the business of a domestic insurer shall direct the Commissioner promptly:
(i)
to take possession of the property of the insurer;
(ii)
to liquidate the business of the insurer;
(iii)
to deal with the property and business of the insurer in the name of the Commissioner or in the name of the insurer, as the court directs; and
(iv)
to notify all creditors that may have claims against the insurer to present their claims.
(2)
The Commissioner may apply for, and the court may issue, an order to dissolve the corporate existence of a domestic insurer:
(i)
on application of the Commissioner for an order to liquidate the domestic insurer; or
(ii)
at any time after the court has granted the order of liquidation.
(3)
An order to liquidate the business of the United States branch of an alien insurer that has trusteed assets in the State shall:
(i)
be on the same terms as those required for a domestic insurer under paragraph (1) of this subsection; but
(ii)
include only the assets of the business of the United States branch of the alien insurer.
(d)
An order to conserve the assets of a foreign insurer or alien insurer shall require the Commissioner promptly to take possession of and conserve the property of the insurer in the State, subject to further direction by the court.
(e)
An order to liquidate the assets in the State of a foreign insurer shall require the Commissioner promptly to take possession of and liquidate the property of the insurer in the State, subject to further direction by the court and with due regard to the rights and powers of the domiciliary receiver as provided in this subtitle.
Md. Code Ann., Ins. § 9-213 (2026)
Title 9. Impaired Entities
Subtitle 2. Liquidation, Rehabilitation, Reorganization, and Conservation
§ 9–213LinkCopy Citation
(a)
In this section, “appointed receiver” means a person, other than the Commissioner, that the court appoints as a conservator, rehabilitator, or receiver under this section.
(b)
(1)
On motion of the court or the Commissioner, the court may issue an order that appoints or substitutes a person other than the Commissioner as conservator, rehabilitator, or receiver:
(i)
on initial application by the Commissioner for an order to appoint the Commissioner as conservator, rehabilitator, or receiver under this subtitle; or
(ii)
at any time during the course of a conservatorship, rehabilitation, or receivership under this subtitle.
(2)
An appointed receiver has the same powers and duties that the Commissioner has under this subtitle as conservator, rehabilitator, or receiver.
(c)
(1)
In addition to any other report required by the court, the court shall require an appointed receiver at least quarterly to file with the Commissioner and court a report about:
(i)
the status of the conservatorship, rehabilitation, or receivership; and
(ii)
the activities of the appointed receiver since the last report filed under this paragraph.
(2)
The report required under paragraph (1) of this subsection at a minimum shall include:
(i)
information of the character required by Title 13 of the Maryland Rules that applies to receivers generally;
(ii)
any other information necessary to provide a complete report on the financial affairs and condition of the conservatorship, rehabilitation, or receivership;
(iii)
a complete account of all efforts by the appointed receiver since the last report:
(1)
to sell or dispose of the remaining business, assets, or policies of the insurer; or
(2)
to otherwise bring to a prompt conclusion the conservatorship, rehabilitation, or receivership; and
(iv)
copies of any actuarial or other evaluations of the insurance business and assets under the control of the appointed receiver.
(3)
The report shall be audited unless for good cause the court waives the audit.
(d)
Subject to any protective order that the court considers appropriate, information filed under seal shall be provided to both the Commissioner and the affected guaranty association.
(e)
The appointed receiver shall give the Commissioner and any guaranty association that may be obligated to pay claims during the conservatorship, rehabilitation, or receivership full access to all documents and records related to the conservatorship, rehabilitation, or receivership that are in the possession of the appointed receiver.
(f)
The Commissioner may be a party to a conservatorship, rehabilitation, or receivership for which there is an appointed receiver.
(g)
(1)
Subject to approval of the court, the Commissioner and any guaranty association that may be obligated to pay claims during the conservatorship, rehabilitation, or receivership may negotiate for sale of all or part of the assets or book of business of the insurer placed in conservatorship, rehabilitation, or receivership.
(2)
The appointed receiver:
(i)
shall cooperate fully in any sales negotiation under paragraph (1) of this subsection; and
(ii)
may object to the terms of a sale of the assets or book of business of the insurer that results from the negotiation.
(3)
After notice and an opportunity to be heard, the court may limit the efforts of the Commissioner or guaranty association to undertake or continue negotiations for the sale of the assets or book of business of the insurer if the negotiations would impair the ability of the appointed receiver to engage in similar negotiations or discharge other responsibilities.
(h)
(1)
If the Commissioner determines that an appointed receiver is not adequately discharging the duties and responsibilities of the position, the Commissioner may file with the court an application that seeks to discharge the appointed receiver and to appoint the Commissioner as conservator, rehabilitator, or receiver or to appoint a new appointed receiver.
(2)
If the Commissioner establishes by a preponderance of the evidence that grounds exist for discharge of an appointed receiver, the court shall grant the application of the Commissioner to discharge the appointed receiver and to appoint the Commissioner as conservator, rehabilitator, or receiver or to appoint a new appointed receiver.
Md. Code Ann., Ins. § 9-214 (2026)
Title 9. Impaired Entities
Subtitle 2. Liquidation, Rehabilitation, Reorganization, and Conservation
§ 9–214LinkCopy Citation
Within 15 days after appointment as receiver or conservator for an insurer against which a delinquency proceeding has been commenced, the receiver or conservator shall notify each policyholder of the insurer, by letter or other means approved by the court, of the commencement of the delinquency proceeding and of the possibility that the insurance of the policyholder may be canceled.
Md. Code Ann., Ins. § 9-215 (2026)
Title 9. Impaired Entities
Subtitle 2. Liquidation, Rehabilitation, Reorganization, and Conservation
§ 9–215LinkCopy Citation
(a)
On application of the Commissioner at any time, the court may issue ex parte an order that:
(1)
directs the Commissioner to take possession and control of all or part of:
(i)
the property, books, accounts, documents, and other records of an insurer; and
(ii)
the premises that the insurer occupies for the transaction of its business; and
(2)
enjoins the insurer and its officers, directors, stockholders, members, subscribers, agents, and all other persons from the transaction of its business without written consent of the Commissioner.
(b)
(1)
The court shall specify the duration of a seizure order issued under this section.
(2)
The duration of the seizure order shall be the time that the court considers necessary for the Commissioner to determine the condition of the insurer.
(3)
On motion of the court or either party and after notice that the court considers appropriate, the court may hold hearings and extend, shorten, or modify the terms of the seizure order.
(4)
If the Commissioner fails to commence a delinquency proceeding after having had a reasonable opportunity to do so, the court shall vacate the seizure order.
(5)
An order of the court under a delinquency proceeding vacates the seizure order.
(c)
Issuance of a seizure order under this section does not constitute an anticipatory breach of any contract of the insurer.
(d)
(1)
At any time after issuance of an ex parte order under this section, an insurer subject to the order may petition the court for a hearing and review of the order.
(2)
Within 15 days after receipt of the petition, the court shall hold the hearing and review the order.
(e)
(1)
If at any time after issuance of a seizure order the court determines that a person whose interest is or will be substantially affected by the order did not appear at the hearing and has not been served, the court may order that notice be given to that person.
(2)
The order that notice be given does not stay the effect of any other order previously issued by the court.
(f)
At any time during a delinquency proceeding, the court may issue an injunction or order to prevent:
(1)
interference with the Commissioner or the delinquency proceeding;
(2)
waste of the assets of the insurer;
(3)
commencement or prosecution of an action;
(4)
obtaining of preferences, judgments, attachments, or other liens; or
(5)
levy against the insurer or all or part of its assets.
(g)
(1)
Except when disclosure is necessary to comply with a court order, all documents and records that relate to a proceeding under this section, including records of the insurer, files of the Administration, and court records and papers, are confidential.
(2)
The clerk of the court shall hold all documents and records filed with the court in a proceeding under this section in a confidential file.
(3)
After hearing arguments from the parties, the court may order that a document or record be made public.
(h)
Notwithstanding any other provision of law, the Commissioner may not be required to post a bond as a prerequisite for issuance of an order under this section.
(i)
(1)
(i)
After the 14th day following the filing of a delinquency proceeding, a federal home loan bank may not be stayed or prohibited from exercising its rights regarding collateral pledged by an insurer–member.
(ii)
If a federal home loan bank exercises its rights regarding collateral pledged by an insurer–member who is subject to a delinquency proceeding, the federal home loan bank shall repurchase any outstanding capital stock:
(1)
that exceeds the amount of federal home loan bank stock that the insurer–member is required to hold as a minimum investment; and
(2)
to the extent the federal home loan bank in good faith determines the repurchase to be:
(A)
permissible under applicable laws, regulations, regulatory obligations, and the federal home loan bank’s capital plan; and
(B)
consistent with the federal home loan bank’s current capital stock practices applicable to its entire membership.
(2)
After the appointment of a receiver for an insurer–member, the federal home loan bank, within 10 business days after a request from the receiver, shall provide a process and establish a timeline for the following:
(i)
the release of collateral that exceeds the amount required to support secured obligations remaining after any repayment of loans, as determined in accordance with the applicable agreements between the federal home loan bank and the insurer–member;
(ii)
the release of any of the insurer–member’s collateral remaining in the federal home loan bank’s possession after full repayment of all outstanding secured obligations of the insurer–member;
(iii)
the payment of any fees owed by the insurer–member to the federal home loan bank;
(iv)
the operation of deposits and other accounts of the insurer–member with the federal home loan bank; and
(v)
the possible redemption or repurchase of federal home loan bank stock or excess stock of any class that an insurer–member is required to own.
(3)
On request of a receiver for an insurer–member, the federal home loan bank shall provide any options available to the insurer–member to renew or restructure a loan, subject to:
(i)
market conditions;
(ii)
the terms of any outstanding loans made to the insurer–member;
(iii)
the applicable policies of the federal home loan bank; and
(iv)
the federal home loan bank’s compliance with federal laws and regulations.
Md. Code Ann., Ins. § 9-216 (2026)
Title 9. Impaired Entities
Subtitle 2. Liquidation, Rehabilitation, Reorganization, and Conservation
§ 9–216LinkCopy Citation
An appeal may be taken to the Appellate Court of Maryland from:
(1)
an order that grants or refuses rehabilitation, liquidation, or conservation; and
(2)
any other order in a delinquency proceeding that has the character of a final order as to the particular part of the delinquency proceeding covered by the order.
Md. Code Ann., Ins. § 9-217 (2026)
Title 9. Impaired Entities
Subtitle 2. Liquidation, Rehabilitation, Reorganization, and Conservation
§ 9–217LinkCopy Citation
(a)
To facilitate the rehabilitation, liquidation, conservation, or dissolution of an insurer under this subtitle, the Commissioner, subject to the approval of the court, may:
(1)
borrow money;
(2)
execute, acknowledge, and deliver notes or other evidences of indebtedness for the loan;
(3)
secure the repayment of the loan by the mortgage, pledge, assignment, or transfer in trust of all or part of the property of the insurer; and
(4)
take any other action necessary and proper to consummate the loan and to provide for its repayment.
(b)
The Commissioner is not obligated personally or in an official capacity to repay a loan made under this section.
Md. Code Ann., Ins. § 9-218 (2026)
Title 9. Impaired Entities
Subtitle 2. Liquidation, Rehabilitation, Reorganization, and Conservation
§ 9–218LinkCopy Citation
(a)
Whenever under this subtitle a receiver is to be appointed in a delinquency proceeding for a domestic insurer or alien insurer, the court shall:
(1)
appoint the Commissioner as receiver; and
(2)
order the Commissioner promptly to take possession of the assets of the domestic insurer or alien insurer and to administer the assets under the orders of the court.
(b)
(1)
Subject to paragraph (2) of this subsection, beginning on the date of issuance of an order that directs the Commissioner to rehabilitate or liquidate a domestic insurer or to liquidate the United States branch of an alien insurer domiciled in the State, the Commissioner as domiciliary receiver is vested by operation of law with title to and may take possession of all of the property, contracts, rights of action, books, and records of the domestic insurer or alien insurer, wherever located.
(2)
An ancillary receiver in a reciprocal state has the rights and powers as to assets located in that state that are specified in this subtitle for an ancillary receiver appointed in this State.
(c)
The filing of the order that directs possession to be taken, or a certified copy of the order, in an office where instruments affecting title to property are required to be filed provides the same notice as would be provided by a deed, bill of sale, or other evidence of title that is so filed.
(d)
(1)
The Commissioner as domiciliary receiver shall administer properly all assets that come into the possession or control of the Commissioner.
(2)
If considered desirable to protect the assets, the court at any time may require a bond from the Commissioner or Deputy Commissioner.
(3)
On taking possession of the assets of a domestic insurer or alien insurer and subject to the direction of the court, the Commissioner immediately shall:
(i)
conduct the business of the domestic insurer or alien insurer; or
(ii)
take action authorized by this subtitle to rehabilitate, liquidate, or conserve the affairs or assets of the domestic insurer or alien insurer.
Md. Code Ann., Ins. § 9-219 (2026)
Title 9. Impaired Entities
Subtitle 2. Liquidation, Rehabilitation, Reorganization, and Conservation
§ 9–219LinkCopy Citation
(a)
(1)
Whenever under this subtitle an ancillary receiver is to be appointed in a delinquency proceeding for an insurer not domiciled in the State, the court shall appoint the Commissioner as ancillary receiver.
(2)
The Commissioner shall file a petition requesting appointment as ancillary receiver under § 9-211(e) of this subtitle if:
(i)
the Commissioner finds that there are sufficient assets of the insurer located in the State to justify the appointment of an ancillary receiver; or
(ii)
ten or more persons resident in the State with claims against the insurer file a petition with the Commissioner requesting the appointment of an ancillary receiver.
(b)
For the purpose of liquidating an insurer domiciled in a reciprocal state, the domiciliary receiver:
(1)
is vested by operation of law with title to all of the property, contracts, and rights of action, and all of the books and records of the insurer located in this State;
(2)
immediately may recover balances due from local insurance producers and obtain possession of any books and records of the insurer found in this State;
(3)
subject to subsection (c)(1) of this section, may recover other assets of the insurer located in this State; and
(4)
may sue in this State to recover any assets of the insurer to which the domiciliary receiver is entitled under the law of this State.
(c)
(1)
On appointment of an ancillary receiver in this State, the ancillary receiver:
(i)
has the sole right to recover other assets of the insurer specified in subsection (b)(3) of this section during the ancillary receivership proceeding;
(ii)
shall:
(1)
as soon as practicable liquidate from the securities of the ancillary receiver those special deposit claims and secured claims that are proved and allowed in an ancillary proceeding in this State; and
(2)
pay the necessary expenses of the ancillary proceeding; and
(iii)
shall transfer promptly all remaining assets to the domiciliary receiver.
(2)
Subject to paragraph (1) of this subsection, the ancillary receiver and deputies of the ancillary receiver have the same powers and are subject to the same duties concerning administration of the assets of the insurer as a receiver of an insurer domiciled in this State.
Md. Code Ann., Ins. § 9-220 (2026)
Title 9. Impaired Entities
Subtitle 2. Liquidation, Rehabilitation, Reorganization, and Conservation
§ 9–220LinkCopy Citation
(a)
During pendency of a delinquency proceeding in this State or a reciprocal state, an attachment, garnishment, execution, or similar action or proceeding may not be commenced or maintained in a court of this State against the impaired insurer or its assets.
(b)
A lien obtained or an action or proceeding prohibited by subsection (a) of this section is void as against any rights arising in the delinquency proceeding, if the lien was obtained or the action or proceeding commenced within 4 months before or at any time after commencement of a delinquency proceeding.
Md. Code Ann., Ins. § 9-221 (2026)
Title 9. Impaired Entities
Subtitle 2. Liquidation, Rehabilitation, Reorganization, and Conservation
§ 9–221LinkCopy Citation
(a)
A transfer of or lien on the property of an insurer is voidable if the transfer or lien is:
(1)
made or created within 4 months before the issuance of a show–cause order under this subtitle;
(2)
made or created with the intent to give a creditor a preference or to enable the creditor to obtain a greater percentage of the debt than another creditor of the same class; and
(3)
accepted by the creditor having reasonable cause to believe that the preference will occur.
(b)
Each director, officer, employee, stockholder, member, subscriber, and any other person acting on behalf of an insurer that is concerned in a voidable transfer under subsection (a) of this section and each person that, as a result of the voidable transfer, receives any property of the insurer or benefits from the voidable transfer:
(1)
is personally liable; and
(2)
shall account to the Commissioner.
(c)
The Commissioner as receiver in a delinquency proceeding may:
(1)
avoid a transfer of or lien on the property of an insurer that a creditor, stockholder, subscriber, or member of the insurer might have avoided; and
(2)
recover the transferred property or its value from the person that received it unless that person was a bona fide holder for value before the date of issuance of a show–cause order under this subtitle.
(d)
(1)
Except as provided in paragraph (2) of this subsection, the receiver for an insurer–member may not void any transfer of, or any obligation to transfer, money or any other property arising under or in connection with:
(i)
a federal home loan bank security agreement;
(ii)
a pledge, a security, collateral, or a guarantee agreement; or
(iii)
any other similar arrangement or credit enhancement relating to a federal home loan bank security agreement made in the ordinary course of business and in compliance with the applicable federal home loan bank agreement.
(2)
The receiver may void a transfer under this section if the transfer was made with intent to hinder, delay, or defraud:
(i)
the insurer–member;
(ii)
the receiver for the insurer–member; or
(iii)
existing or future creditors.
(e)
This section may not affect a receiver’s rights regarding advances to an insurer–member in delinquency proceedings under 12 C.F.R. § 1266.
Md. Code Ann., Ins. § 9-222 (2026)
Title 9. Impaired Entities
Subtitle 2. Liquidation, Rehabilitation, Reorganization, and Conservation
§ 9–222LinkCopy Citation
(a)
(1)
The Commissioner shall deposit money collected in a delinquency proceeding in a State or national bank, savings bank, or trust company.
(2)
Deposits made by the Commissioner under paragraph (1) of this subsection have priority of payment equal to any other priority specified by the banking laws of this State if the depository:
(i)
is an institution organized and supervised under the laws of this State; and
(ii)
becomes insolvent or liquidates voluntarily or involuntarily.
(3)
The Commissioner may deposit all or part of the money collected in a national bank or trust company as a trust fund.
(b)
To the extent that an investment or account is insured by the Federal Deposit Insurance Corporation, the Commissioner may invest in shares or deposits in a savings and loan association or building and loan association.
Md. Code Ann., Ins. § 9-223 (2026)
Title 9. Impaired Entities
Subtitle 2. Liquidation, Rehabilitation, Reorganization, and Conservation
§ 9–223LinkCopy Citation
Unless an insurer has repaid to all guaranty associations all payments of or on account of the contractual obligations of the insurer, including all expenses of and interest on the obligations, or unless a guaranty association has approved a plan of repayment by the insurer, an insurer subject to a delinquency proceeding may not:
(1)
be released from the delinquency proceeding unless it is converted into a judicial proceeding to rehabilitate or liquidate;
(2)
be allowed to solicit or accept new business;
(3)
be allowed to request or accept the restoration of a suspended or revoked license or certificate of authority; or
(4)
be returned, or have any of its assets returned, to the control of its stockholders or private management.
Md. Code Ann., Ins. § 9-224 (2026)
Title 9. Impaired Entities
Subtitle 2. Liquidation, Rehabilitation, Reorganization, and Conservation
§ 9–224LinkCopy Citation
(a)
In this section, “association” means:
(1)
the Property and Casualty Insurance Guaranty Corporation;
(2)
the Life and Health Insurance Guaranty Corporation; or
(3)
a similar organization in another state.
(b)
Within 120 days after a court of the State makes a final determination that an insurer is an impaired insurer, the Commissioner as receiver shall apply to the court for approval of a proposal to disperse to the association entitled to disbursements unsecured assets out of the marshalled assets of the impaired insurer as those assets become available.
(c)
The proposal for disbursement at a minimum shall provide for:
(1)
adequate cash reserves for payment of expenses of administration and priority claims;
(2)
disbursements of the assets marshalled to date and subsequent disbursements of assets as they become available;
(3)
equitable allocation of disbursements to each of the associations that is entitled to disbursements; and
(4)
the securing by the Commissioner from each association entitled to disbursements under this section an agreement to return to the Commissioner any assets previously disbursed that may be required to pay:
(i)
claims of secured creditors; and
(ii)
claims that fall within the priorities specified in § 9-227(b) of this subtitle in accordance with those priorities.
(d)
An association may not be required to obtain a bond.
(e)
The proposal for disbursement shall require that disbursement be made to the association:
(1)
in an amount at least equal to the payments made or to be made by the association for which the association could assert claims against the Commissioner; and
(2)
in the amount of available assets, if the assets available for disbursement do not equal or exceed the amount of the payments made or to be made by the association.
(f)
(1)
Notice of the application for approval of the proposal for disbursement shall be given to the associations and insurance commissioners of each state.
(2)
Notice is deemed to have been given if sent by certified mail at least 30 days before submission of the application to the court.
(3)
The court may approve the proposal if:
(i)
the required notice has been given under this subsection; and
(ii)
the proposal complies with subsection (c)(1) and (4) of this section.
Md. Code Ann., Ins. § 9-225 (2026)
Title 9. Impaired Entities
Subtitle 2. Liquidation, Rehabilitation, Reorganization, and Conservation
§ 9–225LinkCopy Citation
(a)
Within 3 years after the date of the issuance of an order of rehabilitation or liquidation of a domestic mutual insurer or domestic reciprocal insurer, the Commissioner may file with the court:
(1)
a petition for assessment; and
(2)
a report that states:
(i)
the reasonable value of the assets of the mutual insurer or reciprocal insurer;
(ii)
the liabilities of the mutual insurer or reciprocal insurer to the extent determined by the Commissioner at the time of the report;
(iii)
as provided in § 3-111 of this article, the aggregate amount of any assessment that the Commissioner considers reasonably necessary to pay in full:
(1)
all claims;
(2)
the costs and expenses of the collection of assessments; and
(3)
the costs and expenses of the delinquency proceeding; and
(iv)
any other information about the affairs or the property of the mutual insurer or reciprocal insurer that the Commissioner considers material.
(b)
(1)
On the filing and reading of the report and petition specified in subsection (a) of this section, the court ex parte may order the Commissioner to assess all members or subscribers of the mutual insurer or reciprocal insurer who may be subject to assessment, in an aggregate amount as the court finds reasonably necessary to pay in full:
(i)
all valid claims that are timely filed and proved in the delinquency proceeding;
(ii)
the costs and expenses of imposing and collecting the assessments; and
(iii)
the costs and expenses of the delinquency proceeding.
(2)
The order shall require the Commissioner to assess each member or subscriber for the member’s or subscriber’s proportion of the aggregate assessment in accordance with a reasonable classification of the members or subscribers and a formula made by the Commissioner and approved by the court.
(3)
The court may order an additional assessment on all members or subscribers who may be subject to assessment on the filing and reading of an amendment or supplement to the report and petition specified in subsection (a) of this section if the amendment or supplement is filed within 3 years after the date of issuance of the order of rehabilitation or liquidation.
(4)
After issuance of an order under this subsection, the Commissioner shall assess each member or subscriber in accordance with the order.
(c)
(1)
The total of all assessments against a member or subscriber with respect to a policy, whether imposed under this subtitle or another provision of this article:
(i)
may not be more than as specified in the policy of the member or subscriber; and
(ii)
shall be as limited under this article.
(2)
An assessment may not be imposed against a member or subscriber with respect to a nonassessable policy that is issued in accordance with this article.
(d)
The assessment of a member or subscriber is presumed correct if made by the Commissioner in accordance with a court order that:
(1)
fixes the aggregate amount of the assessment against all members or subscribers; and
(2)
approves the classification and formula made by the Commissioner under subsection (b) of this section.
(e)
(1)
The Commissioner shall mail, or send by electronic means in accordance with § 2–116 of this article, to each member or subscriber at the last address of record with the insurer a notice that:
(i)
states the amount of the assessment to be paid by the member or subscriber;
(ii)
specifies when the assessment should be paid; and
(iii)
requires payment not less than 20 days after the Commissioner mails the notice.
(2)
In a proceeding to collect an assessment, it is not a defense that a member or subscriber failed to receive the notice or failed to receive the notice within the time specified in the notice for payment of the assessment.
(3)
If a member or subscriber fails to pay the assessment within the period specified in the notice, the Commissioner may obtain an order in the delinquency proceeding that requires the member or subscriber to show cause at a time and place fixed by the court why judgment for the amount of the assessment and all costs should not be entered against the member or subscriber.
(4)
A copy of the order and petition for assessment shall be served on the member or subscriber within the time and in the manner designated in the order.
(5)
After service of a copy of the order and petition is made on the member or subscriber:
(i)
if the member or subscriber fails to appear at the time and place specified in the order, the court shall enter judgment against the member or subscriber as requested in the petition; or
(ii)
if the member or subscriber appears in the manner and form required by law in response to the order, the court shall hear and determine the matter and enter judgment.
(6)
The Commissioner may collect the assessment through any other lawful means.
Md. Code Ann., Ins. § 9-226 (2026)
Title 9. Impaired Entities
Subtitle 2. Liquidation, Rehabilitation, Reorganization, and Conservation
§ 9–226LinkCopy Citation
(a)
(1)
If on issuance of an order of liquidation under this subtitle or at any time during a liquidation proceeding the insurer is not clearly solvent, the court, after notice it considers proper and a hearing, shall issue an order that the insurer is an impaired insurer.
(2)
Notwithstanding any previous notice given to creditors, after issuance of an order under paragraph (1) of this subsection, the Commissioner shall notify each person that may have a claim against the insurer that the claim is forever barred unless the person files the claim with the Commissioner at a place and within the time specified in the notice.
(3)
The time specified in the notice:
(i)
shall be as set by the court for filing claims; but
(ii)
may not be less than 6 months after issuance of the order that the insurer is an impaired insurer.
(4)
The notice shall be given in the manner and for the reasonable period of time that the court orders.
(b)
(1)
Each claimant shall set forth in reasonable detail:
(i)
the amount of the claim or the basis on which the amount can be determined;
(ii)
the facts on which the claim is based; and
(iii)
any priority asserted by the claimant.
(2)
Each claim shall:
(i)
be verified by the affidavit of the claimant or a person authorized to act on behalf of the claimant who has knowledge of the facts; and
(ii)
be supported by any documents that may be material to the claim.
(3)
Each claim filed in the State shall be filed with the domiciliary receiver or ancillary receiver in the State on or before the last date specified under this subtitle for filing of claims.
(c)
The receiver shall:
(1)
report a claim to the court:
(i)
within 10 days after receiving the claim; or
(ii)
within an additional period set by the court for good cause shown; and
(2)
recommend in the report action to be taken on the claim.
(d)
(1)
On receipt of the report of the receiver, the court shall:
(i)
set a time for hearing the claim; and
(ii)
direct the claimant or receiver to give notice as the court determines to each person that appears to the court to be interested in the claim.
(2)
The notice given in accordance with this subsection shall:
(i)
specify the time and place of the hearing; and
(ii)
state concisely:
(1)
the amount and nature of the claim;
(2)
any priority asserted by the claimant; and
(3)
the recommendation of the receiver about the claim.
(e)
(1)
At the hearing specified under subsection (d) of this section:
(i)
each person with an interest in the claim may appear; and
(ii)
the court shall issue an order in which the court allows, allows in part, or disallows the claim.
(2)
An order under this subsection is a final order subject to appeal.
(f)
(1)
In a delinquency proceeding commenced in this State against a domestic insurer, a claimant who resides in a reciprocal state may file a claim with:
(i)
any ancillary receiver in the reciprocal state; or
(ii)
the domiciliary receiver.
(2)
Each claim filed under this subsection must be filed on or before the last date set for the filing of claims in the delinquency proceeding in the domiciliary state.
(3)
A controverted claim of a claimant who resides in a reciprocal state may be proved:
(i)
in this State; or
(ii)
if an ancillary proceeding has been commenced in the reciprocal state, in the ancillary proceeding.
(4)
If the claimant elects to prove a claim in the ancillary proceeding, and if the same notice and opportunity to be heard is given the domiciliary receiver of this State as is provided under subsection (g) of this section for an ancillary proceeding in this State, the final allowance of the claim by the courts of the ancillary state shall be accepted in this State as conclusive as to:
(i)
the amount of the claim; and
(ii)
any priority of the claim against special deposits or other security located in the ancillary state.
(g)
(1)
In a delinquency proceeding in a reciprocal state against an insurer domiciled in that state, a claimant who resides in this State may file a claim with:
(i)
any ancillary receiver appointed in this State; or
(ii)
the domiciliary receiver.
(2)
Each claim filed under this subsection must be filed on or before the last date set for the filing of claims in the delinquency proceeding in the domiciliary state.
(3)
A controverted claim of a claimant who resides in this State may be proved:
(i)
in the domiciliary state, as provided by the law of the domiciliary state; or
(ii)
if an ancillary proceeding has been commenced in this State, in the ancillary proceeding.
(4)
If the claimant elects to prove the claim in this State, the claimant shall:
(i)
file the claim with the ancillary receiver; and
(ii)
give written notice to the domiciliary receiver by certified mail, return receipt requested, bearing a postmark from the United States Postal Service, or by personal service at least 40 days before the date set for the hearing.
(5)
The notice shall contain:
(i)
a concise statement of the amount of the claim;
(ii)
the facts on which the claim is based; and
(iii)
any priority asserted by the claimant.
(6)
The domiciliary receiver may appear or be represented in any proceeding in this State that involves adjudication of the claim if, within 30 days after the claimant gives the notice required by this subsection, the domiciliary receiver gives written notice of an intent to contest the claim:
(i)
to the ancillary receiver and to the claimant; and
(ii)
by certified mail, return receipt requested, bearing a postmark from the United States Postal Service, or by personal service.
(7)
The final allowance of the claim by the courts of this State shall be accepted as conclusive as to:
(i)
the amount of the claim; and
(ii)
any priority of the claim against special deposits or other security located in this State.
Md. Code Ann., Ins. § 9-227 (2026)
Title 9. Impaired Entities
Subtitle 2. Liquidation, Rehabilitation, Reorganization, and Conservation
§ 9–227LinkCopy Citation
(a)
In this section, “preferred claim” means a claim that is given priority of payment from the general assets of an insurer under the law of the State or the United States.
(b)
(1)
The first $500 of compensation or wages owed to an officer or employee of an insurer for services rendered within 3 months before the commencement of a delinquency proceeding against the insurer shall be paid before payment of any other debt or claim.
(2)
Subject to paragraph (3) of this subsection, the Commissioner may pay the compensation required to be paid under this subsection as soon as practicable after commencement of the delinquency proceeding.
(3)
At all times, the Commissioner shall reserve funds that the Commissioner believes are sufficient for expenses of administration.
(4)
The priority required under this subsection is instead of any other similar priority that may be authorized by law as to wages or compensation.
(c)
Priority over all other claims in a liquidation proceeding, other than claims for wages specified in subsection (b) of this section, expenses of administration, and taxes, shall be given to:
(1)
claims by policyholders, beneficiaries, insureds, or holders of funding agreements issued under § 16–113 of this article, that arise from and within the coverage of and are not in excess of the applicable limits of policies and insurance contracts issued by the insurer;
(2)
liability claims against insureds that are within the coverage of and are not in excess of the applicable limits of policies and insurance contracts issued by the insurer; and
(3)
claims of:
(i)
the Property and Casualty Insurance Guaranty Corporation;
(ii)
the Life and Health Insurance Guaranty Corporation; and
(iii)
any similar organization in another state.
(d)
Notwithstanding the provisions of subsections (b) and (c) of this section, if there are known or potential claims due the federal government, the following shall be the priority of distribution:
(1)
expenses of administration;
(2)
the following claims without priority among them:
(i)
claims made by policyholders, beneficiaries, insureds, or holders of funding agreements issued under § 16–113 of this article, that arise from and within the coverage of and are not in excess of the applicable limits of policies and insurance contracts issued by the insurer;
(ii)
liability claims against insureds that are within the coverage of and are not in excess of the applicable limits of policies and insurance contracts issued by the insurer; and
(iii)
claims of:
(1)
the Property and Casualty Insurance Guaranty Corporation;
(2)
the Life and Health Insurance Guaranty Corporation; and
(3)
any similar organization in another state;
(3)
claims of the federal government not included in item (2) of this subsection;
(4)
the first $500 of compensation or wages owed to an officer or employee of an insurer for services rendered within 3 months before the commencement of a delinquency proceeding against the insurer, which shall be instead of any other similar priority that may be authorized by law as to wages or compensation;
(5)
claims for taxes and debts due any state or local government; and
(6)
all other claims of general creditors not falling within any other priority under this subsection.
(e)
(1)
The owners of special deposit claims against an insurer for which a receiver is appointed in this State or another state have priority against their special deposits as provided by the law that governs the creation and maintenance of special deposits.
(2)
If there is a deficiency in a special deposit so that the claims secured by the special deposit are not fully discharged, the claimants may share in the general assets after general creditors, and claimants against other special deposits who have received smaller percentages from their respective special deposits, have been paid percentages of their claims equal to the percentage paid from the special deposit.
(f)
(1)
The owner of a secured claim against an insurer for which a receiver has been appointed in this State or another state may:
(i)
surrender the security and file the claim as a general creditor; or
(ii)
have the claim discharged by resort to the security.
(2)
If the owner of a secured claim has the claim discharged by resort to the security, any deficiency shall be treated as a claim against the general assets of the insurer on the same basis as the claims of unsecured creditors.
(3)
The amount of a deficiency is conclusive if adjudicated:
(i)
in an ancillary proceeding under this subtitle; or
(ii)
by a court of competent jurisdiction in a proceeding in which the domiciliary receiver has had notice and an opportunity to be heard.
(4)
If the amount of a deficiency is not conclusive, the amount shall be determined in a delinquency proceeding in the domiciliary state.
(g)
(1)
Current financing money that, in accordance with regulations adopted by the Health Services Cost Review Commission, are provided by an insurer, nonprofit health service plan, or health maintenance organization to a hospital for discounted hospital rates are deemed to be security for the amount of outstanding charges owed by the insurer, nonprofit health service plan, or health maintenance organization to the hospital for bills or claims for services provided by the hospital before the delinquency proceeding.
(2)
A hospital that retains any current financing money as security under this subsection:
(i)
is deemed to be the owner of a secured claim against the insurer, nonprofit health service plan, or health maintenance organization for which a receiver has been appointed; and
(ii)
may discharge its claim against the insurer, nonprofit health service plan, or health maintenance organization as provided under subsection (f) of this section.
(h)
(1)
In a delinquency proceeding against an insurer domiciled in the State, claims owing to residents of ancillary states are preferred claims if similar claims are preferred under the law of this State.
(2)
All claims owing to residents of ancillary states or nonresidents have equal priority of payment from general assets regardless of where the general assets are located.
(i)
In a delinquency proceeding against an insurer domiciled in a reciprocal state, claims owing to residents of this State are preferred claims if similar claims are preferred under the law of that state.
Md. Code Ann., Ins. § 9-228 (2026)
Title 9. Impaired Entities
Subtitle 2. Liquidation, Rehabilitation, Reorganization, and Conservation
§ 9–228LinkCopy Citation
(a)
(1)
Subject to paragraph (2) of this subsection, contingent and unliquidated claims may not share in a distribution of the assets of an insurer that has been adjudicated to be an impaired insurer by an order issued under this subtitle.
(2)
If properly presented, a contingent and unliquidated claim shall be considered and may be allowed to share if:
(i)
the claim becomes absolute against the insurer on or before the last day for filing claims against the assets of the insurer; or
(ii)
there is a surplus and the liquidation is subsequently conducted on the basis that the insurer is solvent.
(b)
If an insurer has been adjudicated to be an impaired insurer, a person that has a cause of action against an insured of the insurer under a liability policy issued by the insurer has the right to file a claim in the liquidation proceeding, even if the claim may be contingent, and the claim may be allowed if:
(1)
a reasonable inference may be made from proof presented on the claim that the person would be able to obtain a judgment in a cause of action against the insured;
(2)
the person provides suitable proof, unless for good cause shown the court directs otherwise, that no further valid claim against the insurer arising out of the cause of action can be made other than the claim already presented; and
(3)
the total liability of the insurer to all claimants arising out of the same act of the insured is not greater than the maximum liability of the insurer were the insurer not in liquidation.
(c)
(1)
A judgment against an insured after the date of issuance of a liquidation order may not be considered in the liquidation proceeding as evidence of liability or of the amount of damages.
(2)
A judgment against an insured by default or collusion before issuance of a liquidation order may not be considered in the liquidation proceeding as conclusive evidence of the liability of the insured to a person with a cause of action against the insured or the amount of damages to which the person is entitled.
(d)
(1)
Except as provided in paragraph (2) of this subsection, a claim of a person that has a secured claim may not be allowed at a sum greater than the difference between:
(i)
the value of the claim without security; and
(ii)
the value of the security itself on:
(1)
the date of issuance of the liquidation order; or
(2)
another date set by the court for determining rights and liabilities as provided in subsection (e) of this section.
(2)
If the claimant surrenders the security to the Commissioner, the claim shall be allowed in the full amount for which it is valued.
(e)
Subject to the provisions of this subtitle on the rights of claimants holding contingent claims, and unless otherwise directed by the court, the rights and liabilities of an insurer, the creditors, policyholders, stockholders, members, and subscribers of the insurer, and other persons interested in the estate of the insurer are fixed on the date on which the order that directs the liquidation of the insurer is filed in the office of the clerk of the court that issued the order.
Md. Code Ann., Ins. § 9-229 (2026)
Title 9. Impaired Entities
Subtitle 2. Liquidation, Rehabilitation, Reorganization, and Conservation
§ 9–229LinkCopy Citation
(a)
Except as provided in subsection (b) of this section, in all cases of mutual debts and credits between an insurer and another person in connection with a delinquency proceeding, the debts and credits shall be offset and the balance only shall be allowed or paid.
(b)
An offset may not be allowed in favor of another person if:
(1)
on the date of issuance of a liquidation order or otherwise, as specified in § 9-228(e) of this subtitle, the obligation of the insurer to the person would not entitle the person to share as a claimant in the assets of the insurer;
(2)
the obligation of the insurer to the person was purchased by or transferred to the person for use as an offset; or
(3)
the obligation of the person is to pay:
(i)
an assessment imposed on the members of a mutual insurer or the subscribers of a reciprocal insurer; or
(ii)
a balance on the subscription to the capital stock of a stock insurer.
Md. Code Ann., Ins. § 9-229.1 (2026)
Title 9. Impaired Entities
Subtitle 2. Liquidation, Rehabilitation, Reorganization, and Conservation
§ 9–229.1LinkCopy Citation
(a)
(1)
In this section the following words have the meanings indicated.
(2)
“Commodity contract” means:
(i)
a contract for the purchase or sale of a commodity for future delivery on, or subject to the rules of, a board of trade designated as a contract market by the Commodity Futures Trading Commission under the federal Commodity Exchange Act or board of trade outside the United States;
(ii)
an agreement that is:
(1)
subject to regulation under § 19 of the federal Commodity Exchange Act; and
(2)
commonly known to the commodities trade as a margin account, margin contract, leverage account, or leverage contract; or
(iii)
an agreement or transaction that is:
(1)
subject to regulation under § 4c(b) of the federal Commodity Exchange Act; and
(2)
commonly known to the commodities trade as a commodity option.
(3)
“Contractual right” means any right, whether or not evidenced in writing, arising under:
(i)
statutory law, common law, or law merchant;
(ii)
a rule or bylaw of a national securities exchange, national securities clearing organization, or securities clearing agency; or
(iii)
a rule, bylaw, or resolution of the governing body of a contract market or its clearing organization.
(4)
“Forward contract” means a contract, other than a commodity contract, for the purchase, sale, or transfer of:
(i)
a commodity, as defined in § 1 of the federal Commodity Exchange Act; or
(ii)
any similar good, article, service, right, or interest that presently is or in the future becomes the subject of dealing in the forward contract trade, or a product or by–product thereof, with a maturity date more than 2 days after the date the contract is entered into, including, but not limited to, a repurchase transaction, reverse repurchase transaction, consignment, lease, swap, hedge transaction, deposit, loan, option, allocated transaction, unallocated transaction, or a combination of these or an option on any of them.
(5)
(i)
“Netting agreement” means a contract or agreement, including terms and conditions incorporated by reference in the contract or agreement, that:
(1)
documents one or more transactions between the parties to the contract or agreement for or involving one or more qualified financial contracts; and
(2)
provides for the netting or liquidation of qualified financial contracts or the present or future payment obligations or payment entitlements under qualified financial contracts, including liquidation or close–out values relating to the obligations or entitlements, among the parties to the netting agreement.
(ii)
“Netting agreement” includes a master agreement that, together with all schedules, confirmations, definitions, and addenda to and transactions under any thereof, shall be treated as one netting agreement.
(6)
“Qualified financial contract” means a commodity contract, forward contract, repurchase agreement, reverse repurchase agreement, securities contract, swap agreement, or any similar agreement that the Commissioner determines by regulation or order to be a qualified financial contract for purposes of this subtitle.
(7)
(i)
“Repurchase agreement” or “reverse repurchase agreement” means an agreement, including related terms, that provides for the transfer of certificates of deposit, eligible bankers’ acceptances, or securities that are direct obligations of, or that are fully guaranteed as to principal and interest by, the United States or an agency of the United States against the transfer of funds by the transferee of the certificates of deposit, eligible bankers’ acceptances, or securities with a simultaneous agreement by the transferee to transfer to the transferor certificates of deposit, eligible bankers’ acceptances, or securities as described above in this subparagraph at a certain date not later than 1 year after the transfers or on demand, against the transfer of funds.
(ii)
For purposes of the definitions of “repurchase agreement” and “reverse repurchase agreement” in subparagraph (i) of this paragraph, the items that may be subject to a repurchase agreement or a reverse repurchase agreement include mortgage–related securities, a mortgage loan, and an interest in a mortgage loan, and do not include any participation in a commercial mortgage loan unless the Commissioner determines by regulation or order to include the commercial mortgage loan participation.
(8)
(i)
“Securities contract” means a contract for the purchase, sale, or loan of a security, including:
(1)
an option for the repurchase or sale of a security, certificate of deposit, or group or index of securities, including an interest therein or based on the value thereof;
(2)
an option entered into on a national securities exchange relating to foreign currencies; or
(3)
the guarantee of a settlement of cash or securities by or to a securities clearing agency.
(ii)
In subparagraph (i) of this paragraph, “security” includes a mortgage loan, mortgage–related securities, and an interest in any mortgage loan or mortgage–related security.
(9)
“Swap agreement” means an agreement, including the terms and conditions incorporated by reference in the agreement, that is a rate swap agreement, basis swap, commodity swap, forward rate agreement, interest rate future, interest rate option, forward foreign exchange agreement, spot foreign exchange agreement, rate cap agreement, rate floor agreement, rate collar agreement, currency swap agreement, cross–currency rate swap agreement, currency future, currency option, or any other similar agreement, and includes any combination of agreements and an option to enter into an agreement.
(b)
Notwithstanding any other provision of State law, a person may not be stayed or otherwise prohibited from exercising:
(1)
a contractual right to terminate, liquidate, or close out any netting agreement or qualified financial contract with an insurer because of:
(i)
the insolvency, financial condition, or default of the insurer at any time, provided that the right is enforceable under applicable law other than this subtitle; or
(ii)
the commencement of a delinquency proceeding under this subtitle;
(2)
any right under a pledge, security, collateral, or guarantee agreement or any other similar security arrangement or credit support document relating to a netting agreement or qualified financial contract; or
(3)
subject to any provision of § 9-229(b) of this subtitle, any right to offset or net out any termination value, payment amount, or other transfer obligation arising under or in connection with a netting agreement or qualified financial contract if the counterparty or its guarantor is organized under the laws of the United States, a state, or a foreign jurisdiction approved by the Securities Valuation Office of the National Association of Insurance Commissioners as eligible for netting.
(c)
(1)
Notwithstanding a provision in a netting agreement that the nondefaulting party is not required to pay any net or settlement amount due to the defaulting party, on termination of the netting agreement, the net or settlement amount, if any, owed by a nondefaulting party to an insurer against which an application or petition has been filed under this subtitle, shall be transferred to or on the order of the receiver for the insurer, even if the insurer is the defaulting party.
(2)
Any limited two-way payment provision in a netting agreement with an insurer that has defaulted shall be deemed to be a full two-way payment provision as against the defaulting insurer.
(3)
Any such net or settlement amount shall be a general asset of the insurer, except to the extent such net or settlement amount is subject to one or more secondary liens or encumbrances.
(d)
In making a transfer of a netting agreement or qualified financial contract of an insurer subject to a delinquency proceeding under this subtitle, the receiver shall:
(1)
transfer to one party, other than an insurer subject to a delinquency proceeding under this subtitle, all netting agreements and qualified financial contracts between a counterparty or an affiliate of a counterparty and the insurer that is the subject of the delinquency proceeding, including:
(i)
all rights and obligations of each party under each netting agreement and qualified financial contract; and
(ii)
all property, including any guarantees or credit support documents, securing any claims of each party under each netting agreement and qualified financial contract; or
(2)
transfer none of the netting agreements, qualified financial contracts, rights, obligations, or property referred to in item (1) of this subsection, with respect to the counterparty and any affiliate of the counterparty.
(e)
(1)
If a receiver for an insurer makes a transfer of one or more netting agreements or qualified financial contracts, the receiver shall use its best efforts to notify any person who is party to the netting agreements or qualified financial contracts of the transfer by 12:00 p.m., the receiver’s local time, on the business day following the transfer.
(2)
In this subsection, “business day” means a day other than a Saturday, a Sunday, or any day on which either the New York Stock Exchange or the Federal Reserve Bank of New York is closed.
(f)
(1)
Notwithstanding any provision of this subtitle other than paragraph (2) of this subsection, a receiver may not avoid a transfer of money or other property arising under or in connection with a netting agreement or qualified financial contract, or any pledge, security, collateral, or guarantee agreement or any other similar security arrangement or credit support document relating to a netting agreement or qualified financial contract, that is made before the commencement of a delinquency proceeding under this subtitle.
(2)
A transfer may be avoided under § 9-221 of this subtitle if the transfer was made with actual intent to hinder, delay, or defraud the insurer, a receiver appointed for the insurer, or existing or future creditors.
(g)
(1)
In exercising any of its power under this subtitle to disaffirm or repudiate a netting agreement or qualified financial contract, a receiver shall take action with respect to each netting agreement or qualified financial contract and all transactions entered into in connection with each netting agreement or qualified financial contract, in its entirety.
(2)
Notwithstanding any other provision of this subtitle, any claim of a counterparty against the estate arising from a receiver’s disaffirmance or repudiation of a netting agreement or qualified financial contract that has not been previously affirmed in the liquidation or immediately preceding rehabilitation proceeding shall be determined and shall be allowed or disallowed:
(i)
as if the claim had arisen before the date of the filing of the petition for liquidation; or
(ii)
if a rehabilitation proceeding is converted to a liquidation proceeding, as if the claim had arisen before the date of the filing of the petition for rehabilitation.
(3)
(i)
The amount of the claim identified in paragraph (2) of this subsection shall be the actual direct compensatory damages determined as of the date of the disaffirmance or repudiation of the netting agreement or qualified financial contract.
(ii)
In subparagraph (i) of this paragraph, “actual direct compensatory damages” does not include punitive or exemplary damages, damages for lost profits or lost opportunity, or damages for pain and suffering, but does include normal and reasonable costs of cover or other reasonable measures of damages used in the derivatives market for the contract and agreement claims.
(h)
All rights of counterparties under this subtitle shall apply to netting agreements and qualified financial contracts entered into on behalf of:
(1)
the general account; or
(2)
separate accounts if the assets of each separate account are available only to counterparties to netting agreements and qualified financial contracts entered into on behalf of that separate account.
(i)
This section does not apply to a person that is an affiliate of the insurer that is the subject of a delinquency proceeding under this subtitle.
Md. Code Ann., Ins. § 9-230 (2026)
Title 9. Impaired Entities
Subtitle 2. Liquidation, Rehabilitation, Reorganization, and Conservation
§ 9–230LinkCopy Citation
(a)
This section may not be construed to abridge otherwise existing legal rights, including the right to resist a petition for liquidation, other delinquency proceedings, or other orders.
(b)
In a delinquency proceeding or in an investigation preliminary to the delinquency proceeding, an officer, manager, director, trustee, owner, employee, or agent of an insurer, another person with authority over any part of the affairs of the insurer, or a person that exercises control directly or indirectly over an activity of the insurer through a holding company or other affiliate of the insurer shall:
(1)
reply promptly in writing to an inquiry from the Commissioner in which the Commissioner requests a written reply;
(2)
make available to the Commissioner any accounts, books, documents, information, records, or property of or relating to the insurer that is in the control, custody, or possession of the person; and
(3)
otherwise cooperate with the Commissioner.
(c)
A person may not obstruct or interfere with the Commissioner in the conduct of a delinquency proceeding or in an investigation preliminary or incidental to the delinquency proceeding.
(d)
An officer, manager, director, trustee, owner, employee, or agent of an insurer, another person with authority over any part of the affairs of the insurer, or a person that exercises control directly or indirectly over an activity of the insurer through a holding company or other affiliate of the insurer may not fail to cooperate with the Commissioner under subsection (b) of this section, obstruct or interfere with the Commissioner in the conduct of a delinquency proceeding or in an investigation preliminary or incidental to a delinquency proceeding, or violate an order of the Commissioner issued under this subtitle.
(e)
(1)
A person that violates subsection (d) of this section is guilty of a misdemeanor and on conviction is subject to a fine not exceeding $10,000 or imprisonment not exceeding 1 year or both.
(2)
After a hearing before the Commissioner, a person that violates subsection (d) of this section is subject to a civil penalty not exceeding $10,000 and to the revocation or suspension of any insurance license issued by the Commissioner.
Md. Code Ann., Ins. § 9-231 (2026)
Title 9. Impaired Entities
Subtitle 2. Liquidation, Rehabilitation, Reorganization, and Conservation
§ 9–231LinkCopy Citation
(a)
In this section, “chief executive officer” means a person charged by the board of directors or trustees of an insurer to administer and implement policies and procedures of the insurer.
(b)
The provisions of this section that apply to insurers also apply to:
(1)
a corporation that operates a nonprofit health service plan under Title 14, Subtitle 1 of this article;
(2)
a dental plan organization, as defined in § 14-401 of this article;
(3)
a surplus lines insurer; and
(4)
a health maintenance organization.
(c)
(1)
A chief executive officer shall immediately provide the Commissioner and all members of the board of directors or the trustees of an insurer with written notice that the insurer is an impaired insurer, if the chief executive officer:
(i)
knows that the insurer is an impaired insurer; and
(ii)
for a period of 60 days, has been unable to remedy the impairment.
(2)
A director, officer, or trustee of an insurer who knows that the insurer is an impaired insurer shall immediately notify the chief executive officer of the impairment.
(d)
Notice provided to the Commissioner under this section has the confidentiality specified in § 7-106 of this article.
(e)
If a person knows that the action will result in or contribute to an insurer becoming an impaired insurer, the person may not:
(1)
conceal property that belongs to the insurer;
(2)
transfer or conceal property of the person or property that belongs to the insurer in contemplation of a delinquency proceeding;
(3)
conceal, destroy, mutilate, alter, or falsify a document that relates to the property of the insurer;
(4)
withhold a document from a receiver, trustee, or other officer of the court entitled to its possession under this subtitle; or
(5)
give, obtain, or receive anything of value for acting or forbearing to act in a delinquency proceeding.
(f)
(1)
In addition to any other applicable penalty provided in this article, a person that violates subsection (e) of this section is guilty of a misdemeanor and on conviction is subject to a fine not exceeding $50,000 or imprisonment not exceeding 3 years or both.
(2)
In addition to any other applicable penalty provided in this article, a person that violates subsection (c) of this section is subject to a civil penalty not exceeding $50,000.
(g)
The Commissioner may issue a cease and desist order in accordance with § 27-103 of this article against a person that violates subsection (c) or subsection (e) of this section.
Md. Code Ann., Ins. § 9-232 (2026)
Title 9. Impaired Entities
Subtitle 2. Liquidation, Rehabilitation, Reorganization, and Conservation
§ 9–232LinkCopy Citation
A director or officer of an insurer, association, or fraternal benefit society that receives a premium or assessment on behalf of the insurer, association, or fraternal benefit society and, at the time of receipt, knows that the insurer, association, or fraternal benefit society is insolvent is guilty of a misdemeanor and on conviction is subject to a fine not exceeding $500 or imprisonment not exceeding 6 months or both.