Section 221.36 - Liquidator's proposal to distribute assets(a) Within one hundred twenty days of a final determination that an insurer is insolvent or in such condition that its further transaction of business will be hazardous to its policyholders, or to its creditors, or to the public by a court of competent jurisdiction of this Commonwealth, the liquidator shall make application to the Commonwealth Court for approval of a proposal to disburse assets out of such company's marshalled assets, from time to time as such assets become available, to any guaranty association in the Commonwealth or in any other state having substantially the same provision of law. The liquidator need not make application, as required above, in instances where it is reasonable to conclude that the assets of the insolvent insurer will not exceed the amounts necessary to pay the costs of liquidation and the payment of claims of creditors either secured or with a priority higher than the claims of policyholders. A guaranty association shall have the right to petition the Commonwealth Court to review an order of the liquidator concluding the assets will not exceed such costs.(b) The proposal shall at least include provisions for: (1) Reserving amounts for the payment of expenses of administration and the payment of claims of secured creditors to the extent of the value of the security held and claims having a priority higher than that of the claims of policyholders.(2) Disbursement of assets marshalled to date and subsequent disbursement of assets as they become available.(3) Equitable allocation of disbursements to each of the associations entitled thereto.(4) The securing by the liquidator, from each of the associations entitled to disbursements pursuant to this section, of an agreement to return to the liquidator such assets previously disbursed as may be required to pay the claims of secured creditors, claims falling within the priorities referred to in subsection (b)(1) and the proportional share of the assets disbursed required by the liquidator to make equivalent distribution to creditors of the same class of priority as policyholders in the event that the association may have received a disbursement of assets in excess of that available to pay all creditors of the insolvent insurer in the same class of priority as policyholders. An association shall return such assets to the liquidator when needed upon its own initiative or upon demand of the liquidator together with any investment income earned on the assets reimbursed. No bond shall be required of any such association.(5) The liquidator may require reports to be made by an association at such time and covering such matters as he may determine. A full report shall be made by the association to the liquidator when assets received have been disbursed or the obligation of an association to pay covered claims of the insolvent insurer has been fulfilled accounting for all assets so disbursed to the association, all disbursements made therefrom, any interest earned by the association on such assets and any other matter as the court may direct.(c) The liquidator's proposal shall provide for disbursements to the associations in amounts estimated to be at least equal to the claim payments made or to be made thereby for which such associations could assert a claim against the liquidator, and shall further provide that if the assets available for disbursement from time to time do not equal or exceed the amount of such claim payments made or to be made by the associations then disbursements shall be in the amount of available assets.(d) Notice of such application shall be given to the associations and to the commissioners of insurance of each of the states where the company is licensed. Any such notice shall be deemed to have been given when deposited in the United States certified mails, first class postage prepaid, at least thirty days prior to the submission of such application to the Commonwealth Court. Action on the application may be taken by the court provided the above required notice has been given and provided further that the liquidator's proposal complies with subsection (b)(1) and (4).1921, May 17, P.L. 789, art. V, § 536, added 1977, Dec. 14, P.L. 280, No. 92, § 2, imd. effective.