Virginia Code

Va. Code Ann. § 38.2-1509 (2026)

Powers of Commission when authorized to rehabilitate or liquidate insurers by court order; disbursement of available assets to an association, etc

✓ current as of May 2026

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A. Whenever the Commission is authorized by order of the Circuit Court of the City of Richmond to rehabilitate or liquidate any domestic insurer other than an insurer writing exclusively title, fidelity and surety, credit or ocean marine insurance, the Commission shall disburse the assets as they become available to an association. Disbursal shall not be made until an application has been filed with the Commission by an association for an insolvent insurer's available assets.

B. The Commission shall disburse the assets of an insolvent insurer as they become available in the following manner:

1. Pay, after reserving for the payment of the costs and expenses of administration, according to the following priorities: (i) claims of secured creditors with a perfected security interest not voidable under § 38.2-1513 to the extent of the value of their security, (ii) claims of the associations for "covered claims" and "contractual obligations" as defined in §§ 38.2-1603 and 38.2-1701 and claims of other policyholders arising out of insurance contracts apportioned without preference, (iii) taxes owed to the United States and other debts owed to any person, including the United States, which by the laws of the United States are entitled to priority, (iv) wages entitled to priority as provided in § 38.2-1514, and (v) other creditors; and

2. Equitably allocate disbursements to each of the entitled associations; and

3. Secure an agreement from each of the entitled associations requiring the return to the Commission of any assets previously disbursed to the association required to pay claims entitled to priority in subdivision 1 of this subsection. No bond shall be required of any entitled association; and

4. Require a full report to be made by the association to the Commission accounting for all assets disbursed to the association, all disbursements made from these assets, any interest earned on these assets and any other matter as the Commission may require.

C. The Commission shall provide for disbursements to the association in an amount estimated at least equal to the claim payments made or to be made by the association for which the association could assert a claim against the Commission. In addition, the Commission shall provide that if the assets available for disbursement do not equal or exceed the amount of claim payments made or to be made by the associations, then disbursements shall be in the amount of available assets.

D. The Commission shall notify the affected associations and the commissioners of insurance in the other states of any disbursement made according to this section. The notice shall be deemed given when sent by certified mail at least thirty days prior to disbursement.

1978, c. 696, § 38.1-133.1; 1979, c. 385; 1986, c. 562; 1996, c. 81.

Notes of Decisions

Cited in 3 cases, 1997–2017 · leading case: Appalachian Reg'l Healthcare v. Cunningham, 806 S.E.2d 380 (Va. 2017).

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Appalachian Reg'l Healthcare v. Cunningham, 806 S.E.2d 380 (Va. 2017). · cites it 8× “After the Hearing Examiner issued his report in the Virginia litigation, the SCC adopted most of his findings, including his conclusion that "[t]he Assumed Claims constitute 'claims of other policyholders arising out of insurance contracts' pursuant to [ Code §…”

Swiss Re Life Co. Am. v. Gross, 479 S.E.2d 857 (Va. 1997). · cites it 16× “*141 In this appeal from the State Corporation Commission (Commission), the primary issue we consider is whether Code § 38.2-1509 permits a reinsurer for an insurance company in receivership to obtain administrative priority over other creditors in recovering amounts owed it…”

Weingarten v. Gross, 563 S.E.2d 771 (Va. 2002). · cites it 22× “5 million of the estate to be reserved under Code § 38.2-1509 and not distributed by the Deputy Receiver until the issues were finally resolved.”

— Va. Code Ann. § 38.2-1509(B) — 1 case

Swiss Re Life Co. Am. v. Gross, 479 S.E.2d 857 (Va. 1997). “*141 In this appeal from the State Corporation Commission (Commission), the primary issue we consider is whether Code § 38.2-1509 permits a reinsurer for an insurance company in receivership to obtain administrative priority over other creditors in recovering amounts owed it…”

— Va. Code Ann. § 38.2-1509(B)(1)(ii) — 1 case

Appalachian Reg'l Healthcare v. Cunningham, 806 S.E.2d 380 (Va. 2017). “After the Hearing Examiner issued his report in the Virginia litigation, the SCC adopted most of his findings, including his conclusion that "[t]he Assumed Claims constitute 'claims of other policyholders arising out of insurance contracts' pursuant to [ Code §…”

— Va. Code Ann. § 38.2-1509(B)(1)(v) — 1 case

Weingarten v. Gross, 563 S.E.2d 771 (Va. 2002). “5 million of the estate to be reserved under Code § 38.2-1509 and not distributed by the Deputy Receiver until the issues were finally resolved.”

— Va. Code Ann. § 38.2-1509(B)(l) — 1 case

Weingarten v. Gross, 563 S.E.2d 771 (Va. 2002). “5 million of the estate to be reserved under Code § 38.2-1509 and not distributed by the Deputy Receiver until the issues were finally resolved.”

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