P.R. Laws tit. 26, § 4025
(1)
(a) A preference is the transfer of any property or interest on a property of an insurer to or for the benefit of a creditor, for or on account of an antecedent debt made or accepted by the insurer within one (1) year prior to filing a successful petition for liquidation pursuant to this chapter, whose effect may be to enable the creditor to obtain a greater percentage of this debt than another creditor of the same class would have received. If a liquidation order is filed while the insurer is already subject to a rehabilitation order, then these transfers shall be deemed to be preferences if completed or accepted within one (1) year prior to filing the successful petition for rehabilitation or within the two (2) years prior to filing the successful petition for liquidation, whichever time is shorter.
(b) The liquidator may annul a preference if:
(i) The insurer was insolvent at the time of the transfer; or
(ii) the transfer was made within one hundred and twenty (120) days prior to filing the petition; or
(iii) the creditor receiving the same or to be benefited thereby or his/her agent in the transaction had, at the time of the transaction, reasonable cause to believe that the insurer was insolvent or was about to become insolvent, or
(iv) the creditor receiving the same was an officer, employee or attorney or other person who, in fact, was in a position of influence over the insurer comparable to that of an officer, regardless of whether or not he/she held such a position, or an affiliate corporation, or a shareholder directly or indirectly holding more than five percent of any type of stock issued by the insurer or any other person, firm, corporation, partnership or group of persons with whom the insurer conducted business on a regular basis.
(c) When the preference is voidable the liquidator may recover the property, or if it has been converted, its value from any person who has received or converted it, except that when a bona fide purchaser or lienor has paid less than fair value, he/she shall have a lien upon the property to the extent of the consideration given by him/her. When 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.
(2)
(a) A transfer of property other than real property shall be deemed to be made or completed when it is so perfected that no subsequent lien obtainable by legal or equitable proceedings with relation to an oral contract could become superior to the rights of the transferee.
(b) A transfer of real property shall be deemed to be made or completed when it becomes so perfected that no subsequent bona fide purchaser who has directly acquired it from the insurer could obtain rights superior to those of the transferee.
(c) A transfer which creates an equitable lien shall not be deemed to be perfected if there are available means by which a legal lien could be established.
(d) A transfer not perfected prior to the filing of the petition for liquidation is deemed to have been made immediately before the filing of the successful petition.
(e) The provisions of this subsection apply whether or not there are or have been creditors who could have obtained a lien or whether there are or have been persons who could have been bona fide purchasers.
(3)
(a) A lien obtained through legal or equitable proceedings under an oral contract is one arising in the ordinary course of such proceedings upon the entry or docketing of a judgment or decree or upon attachment, garnishment, execution or like process whether before, upon or after the judgment or decree and whether before or upon execution. It does not include liens which under applicable law are given a special priority over other liens which are prior in time.
(b) A lien obtained by legal or equitable proceedings could become superior to the rights of a transferee, or a buyer could obtain rights superior to those of a transferee within the context of subsection (2) of this section, if such consequences would ensue only from the lien or the purchase itself, or from the lien or the sale followed by any action wholly under the control of the respective lienholder or buyer, with or without the aid of ministerial action by public officers. Such a lien, however, cannot become superior and such sale could not create superior rights for the purposes of subsection (2) of this section, through any actions subsequent to the obtaining of such a lien or subsequent to such a purchase which requires the agreement or concurrence of any third party, or which requires any further judicial action or ruling.
(4) A transfer of property for or on account of a new and contemporaneous consideration which, pursuant to subsection (2) of this section, is deemed to be made and completed after the transfer because of delay in perfecting it, does not thereby become a transfer for or on account of an antecedent debt, if any action required by the applicable law in order to perfect the transfer as against the liens or against the rights of bona fide purchasers are performed within twenty-one (21) days or within the term expressly established by law, whichever is less. A transfer to secure a future loan, if it were in fact to be made, or a transfer which becomes security for a future loan, shall have the same effect as a transfer for or on account of a new and contemporaneous consideration.
(5) If any lien deemed voidable pursuant to subsection (1)(b) of this section has been dissolved by the furnishing of a bond or other obligation, the guarantor of which has been indemnified directly or indirectly by the transfer or the creation of a lien upon the property of an insurer prior to the filing of a petition under this chapter, which results in an order for liquidation, the indemnifying transfer or lien shall also be deemed voidable.
(6) The property affected by a lien deemed voidable pursuant to subsections (1) and (5) of this section shall be discharged from such lien, and the same and any other indemnifying property transferred to, or for the benefit of of a guarantor, shall pass to the liquidator, except that the Court may, on due notice, order that the lien be preserved for the benefit of the estate and may also direct that the transfer be executed as may be proper to evidence the title of the liquidator.
(7) The Receivership Court shall have summary jurisdiction over any proceeding by the liquidator to hold hearings and determine the rights of the parties under this section. Reasonable notice of the hearings in the proceeding shall be given to all parties in interest, including the obligee of a releasing bond or other like obligation. When an order is issued for the recovery of indemnifying property in kind or for the voiding of an indemnifying lien, the court, by petition of any interested party, shall determine in the same proceeding the value of the property or lien, and if the value were [less] than the amount for which the property is [indemnified] or [less] than the amount of the lien, the transferee or lienholder may elect to retain the property or lien upon payment of its value to the liquidator, as ascertained by the court, on the reasonable dates set by the court.
(8) The liability of the surety under a releasing bond or other like obligation shall be discharged to the extent of the value of the indemnifying property recovered or the indemnifying lien nullified and voided by the liquidator, or when the property is retained under subsection (7) of this section, to the extent of the amount paid to the liquidator.
(9) If a creditor has been preferred, and afterward in good faith grants additional credit to the insurer without security of any kind, in return for property which becomes part of the estate of the insurer, the amount of new credit which remains unpaid at the time of the petition may be set off against the preference which would otherwise be recoverable from him/her.
(10) If an insurer, within one hundred and twenty (120) days before filing a successful petition for liquidation pursuant to this chapter or at any time, in contemplation of a proceeding for liquidation, directly or indirectly pays an amount of money or transfers property to an attorney-at-law for services rendered or to be rendered, the court may examine the transaction on its own motion or by petition of the liquidator and it shall be held valid only to the extent of a reasonable amount to be determined by the court, and the excess may be recovered by the liquidator for the benefit of the estate. When the attorney holds a position of influence over the insurer or over an affiliate thereof, payment of any amount of money or the transfer to the attorney-at-law of any property for services rendered or to be rendered shall be governed by the provisions of subsection (1)(b)(4) of this section.
(11)
(a) Every officer, manager, employee, shareholder, member, subscriber, attorney in fact or any other person acting on behalf of the insurer who knowingly participates in giving any preference when he/she has reasonable cause to believe the insurer is or is about to become insolvent, at the time of the preference, shall be personally liable to the liquidator for the amount of the preference. It shall be presumed that reasonable cause for such a belief existed if the transfer was made within a year before the date of filing of the successful petition for liquidation.
(b) Any person who receives property from the insurer or the benefit thereof, as a preference voidable under subsection (1) of this section, shall be personally liable therefor and shall be bound to account to the liquidator.
(c) Nothing provided in this section shall prejudice any other claim by the liquidator against any person.
History —Ins. Code, added as § 40.250 on Aug. 17, 1991, No. 72, § 1; Dec. 14, 2007, No. 206, § 24.