California Insurance Code 12629-12629.48
12629. The provisions of this article shall apply to any mortgage insurer: (a) The property, business and assets of which are in possession of the commissioner; (b) Which is no longer able to conduct the normal business of a mortgage insurer; (c) Which is unable to discharge its debts or other obligations as they become due; (d) Which is in such condition that unless such insurer is liquidated or a plan of reorganization consummated a preference is likely to be obtained by some holders of mortgage participation certificates over other such holders, or by some creditors over other creditors of the same class; (e) Which is in such condition that it will probably be necessary, unless a plan of reorganization is consummated, to liquidate such insurer or to sell or otherwise dispose of a substantial part of its assets at substantially less than the amount which might reasonably be expected to be realized therefrom in the ordinary and proper conduct of a going business. The determination of the commissioner that a mortgage insurer is included in one or more of the foregoing classifications shall be prima facie evidence of such fact. 12629.21. In the case of a mortgage insurer which has issued mortgage participation certificates under mortgage participation trusts pursuant to the provisions of Chapter VIII, Title II, Part IV, Division I of the Civil Code, such mortgage participation trusts, the mortgage participation certificates issued thereunder and any policies of mortgage insurance issued in connection therewith shall be subject also to the provisions of this article whenever a revision, modification or termination of such trusts, certificates or policies is found by the court to be necessary or advantageous in connection with any plan submitted to it as hereinafter provided. 12629.22. The term "plan" as used in this article means any plan for the rehabilitation, readjustment or reorganization of any mortgage insurer or of all or any part of the business, properties and assets of such insurer, or for the readjustment, modification or reorganization of the rights or interests of any or all of the holders of mortgage participation certificates or other certificates or securities or policies of mortgage insurance of such insurer, or of any creditors of such insurer and other persons, if any, interested therein. 12629.23. Without limiting the generality of section 12629.22, a plan may provide for any one or more of the following: (a) For the delivery of all or any part of the business, properties, or assets of such insurer to the commissioner and the return thereof to such insurer after the plan is fully consummated; (b) For the transfer of all or any part of the business, properties, or assets of such insurer to another corporation or to two or more other corporations, which corporation or corporations, or any of them, may, but need not be, a mortgage insurer or a national mortgage association; (c) For the modification, revision or termination of any mortgage participation trusts which have been created by such insurer; (d) For the issuance of new mortgage participation certificates or amended mortgage participation certificates or stock, bonds, debentures or other securities of such insurer or of any other corporation or corporations, to which the business, properties or assets, or any part thereof, of such insurer have been transferred, and for the exchange thereof to the holders of mortgage participation certificates issued by such insurer or to other creditors of such insurer for the outstanding mortgage participation certificates or other obligations of such insurer or for the sale or other disposition of such new certificates, stock, bonds, debentures or other securities. 12629.24. Any new mortgage insurer formed pursuant to a plan to continue the business of an existing insurer may adopt and continue to use the name of such existing insurer or any part of such name. 12629.25. A plan may be proposed: (a) By the commissioner; or (b) Subject to the approval of the commissioner by any mortgage insurer through action of its board of directors. 12629.26. No plan shall be proposed or approved by the commissioner unless the commissioner is satisfied that the plan is fair and equitable and does not discriminate in favor of any class of certificate holders, investors, creditors or other persons affected thereby, and is feasible. 12629.27. A plan, if proposed or approved by the commissioner, shall be presented by the proposer to the superior court of the county in which the principal office of such insurer is located, with a petition that the court determine the fairness of such plan and the approvals requisite to such plan becoming operative, which petition shall set forth such plan and the fact that it has been proposed or approved by the commissioner and any other facts which such proposer shall deem material to a consideration of the fairness of the plan. 12629.28. Thereupon the court shall fix the time and place for the hearing of such petition and shall direct that notice thereof shall be mailed to each of the known certificate holders, investors and creditors of such insurer affected by such plan and to the trustee or depositary under all mortgage participation trusts created by such insurer and then in existence, together with either a copy of such plan or a summary thereof, which summary shall be either prepared or approved by the commissioner. If the commissioner shall be the proposer of such plan the court shall direct such insurer to deliver to the commissioner a list of the names and addresses of all certificate holders, creditors, investors and other known persons affected by such plan. Said notices shall be mailed, postage prepaid, to the respective addresses as shown on such list, or if no address be there shown, to the last known address. 12629.29. In addition the proposer of such plan shall cause notice of the time and place fixed for such hearing to be posted in three public places in said county not less than twenty days before the day fixed for such hearing and to be published at least once, not less than twenty days nor more than thirty days before the day fixed for such hearing in a newspaper of general circulation published in said county. 12629.30. At the time and place fixed for such hearing or at the time and place to which such hearing may be continued by the court, the court shall hear the parties interested therein and if it deem it necessary may take testimony relative thereto and may accept proof in affidavit form as to any fact or circumstance material thereto. 12629.31. Such hearing shall be, among other things, upon the fairness of the terms and conditions of the issuance of all new or amended mortgage participation certificates, stock, bonds, debentures or other securities to be issued pursuant to such plan and of the exchange thereof for outstanding mortgage participation certificates, claims or property interests, or partly for such exchange and partly for cash, and all persons to whom it is proposed to issue such certificates, stock, bonds, debentures or other securities in such exchange shall have the right to appear and be heard at such hearing. 12629.32. No plan shall be approved by the court unless the court is satisfied that the plan is fair and equitable and does not discriminate in favor of any class of investors, creditors, certificate holders or other persons affected thereby and is feasible. In case an insurer has outstanding mortgage participation certificates issued under one or more than one mortgage participation trust, the holders of mortgage participation certificates in each of such trusts may be considered as one class. 12629.33. After the completion of such hearing the court shall approve, modify or disapprove such plan. No such plan shall become operative unless and until it shall have been approved in its original form or, if modified, in its modified form, by such court and the commissioner, nor unless and until such plan shall have been consented to either in person or by a duly appointed agent, attorney or committee by the following persons: (a) If the plan affects the stockholders of such insurer, then by the holders of a majority in amount of the outstanding stock of such insurer; (b) If the plan affects mortgage participation trusts or the holders of mortgage participation certificates issued thereunder, then by the holders of two-thirds in interest of all mortgage participation certificates outstanding under each or all, as the court may determine, of the mortgage participation trusts which may be so affected; (c) If such insurer shall have creditors, then by two-thirds of each class of creditors of such insurer; and (d) By two-thirds in amount of each class of other known persons, if any, affected by the plan. 12629.34. Consent shall not be required in the case of any stockholder, mortgage participation certificate holder, creditor or other person, or any class thereof, if: (a) The rights of such person or class shall not be materially affected by such plan; or (b) Such plan shall provide for the payment in cash of the value of the right or interest of such person or class. Such consents shall not be required from stockholders of any insurer if the value of the assets of such insurer shall be less than the liabilities thereof (mortgage participation certificates and policies of mortgage insurance not being included as liabilities), or if the business, properties and assets of such insurer be then in the possession of the commissioner. 12629.35. For the purpose of this article real property, contracts for the sale of real property, loans and all other assets (whether like or unlike the foregoing) shall be valued at what may reasonably be expected to be realized therefrom in the ordinary and proper conduct of a going business. 12629.36. The consents required by this article may be given before the plan is presented to the court or after such presentation and before the court has approved it or after such approval. 12629.37. If at such time as the plan is approved by the court the proportions above required of the stockholders, certificate holders, creditors and other persons, if any, affected thereby shall not have consented to the plan, the order of court may provide that upon satisfactory proof of the fact that such consents have been given a further order may be entered ex parte providing that such plan shall become operative, which further order shall be binding upon the commissioner, the insurer and all such stockholders, certificate holders, creditors and other persons, if any, affected thereby. 12629.38. The superior court in which such petition is pending is hereby given jurisdiction to determine all questions required to be determined pursuant to this article including, without limiting the generality of the foregoing, the following: Whether the insurer subject to such plan is included in one or more of the classes specified in section 12629; whether any such plan, either in its original or modified form is fair and equitable; whether it discriminates in favor of any class of certificate holders, creditors or other persons affected thereby; whether it is feasible; whether the terms and conditions of any proposed issuance and exchange of stock, mortgage participation certificates, bonds, notes, debentures or other securities thereunder are fair, and to approve or disapprove such terms and conditions; the total liabilities and total assets of such insurer; the approvals requisite under this article to such plan becoming operative, including jurisdiction to determine, for the purposes of the plan and the consents, the division of the creditors and other known persons, if any, affected by the plan into classes according to the nature of their respective claims and interests. 12629.39. When the plan shall have been approved by the court and the commissioner, as hereinbefore provided, and shall have been consented to by or on behalf of the respective proportions herein required of stockholders, certificate holders, creditors and other persons, if any, affected thereby, such plan shall be binding upon the commissioner, the mortgage insurer affected thereby, all the stockholders, certificate holders and creditors of such insurer, and all other persons, if any, affected thereby; and such insurer, the trustees and depositaries under all mortgage participation trusts affected thereby and all stockholders, certificate holders, creditors and other persons shall be conclusively deemed to have consented to all the terms and conditions of such plan whether or not all of such persons shall actually have consented thereto and whether or not all of them shall have received notice of such plan or of such hearing, as hereinbefore provided. 12629.40. Thereupon such steps shall be taken by the commissioner, the insurer and all persons affected by the plan, and all acts shall be done, or instruments executed and all new or amended certificates, stock, bonds, debentures, notes or other securities issued as may be required by such plan so approved and as may be necessary or desirable for the consummation of such plan. 12629.41. In all cases where the plan involves the revision, modification or termination of mortgage participation trusts and as an incident thereto the transfer of the title to trust assets, the title to and management of such trust assets pending the hearing on such plan and its approval by the court and the commissioner and for such further period as the court may prescribe and subject to such reserve powers as may be granted by the trust agreement to the insurer, or conferred by the court, shall continue in the trustee or depositary under the respective mortgage participation trusts affected. Upon the approval of such plan by the court and the commissioner the trust assets of all such trusts shall be transferred, conveyed, assigned, delivered, or otherwise dealt with, conformably to such plan, as the court may order and direct, upon application of the proposer of such plan. 12629.42. The superior court shall retain jurisdiction of all parties to said proceeding until the plan approved is fully carried out and consummated and the carrying out and consummation of such plan shall be subject to the supervision and control of such court. In connection therewith the court may make all orders and decrees by way of injunction or otherwise as may be necessary, proper and equitable in order to carry out and consummate said plan and make the same fully effective. 12629.43. No appeal from an order of the superior court approving or modifying a plan shall be effectual for any purpose unless within 30 days after the entry of the order the appellant or appellants file with the clerk of the court a bond to the effect that the appellant or appellants, in the event the order is affirmed on appeal, will pay all of respondent's costs, expenses and reasonable attorney's fees arising from the appeal, and also all losses and damages to the certificate holders, creditors and other persons, if any, affected by the plan, arising from any delay in consummating the plan during the pendency of the appeal. The form of the bond shall be approved and the amount of the bond fixed by the superior court. In no case shall the bond be for an amount greater than 1 percent of the total liabilities of the insurer, provided that if mortgage participation certificates are affected by the plan the bond shall be for an amount not more than 1 percent of the total liabilities of the insurer plus 1 percent of the aggregate face amount of all mortgage participation certificates of the insurer outstanding. 12629.44. Appeals from orders approving plans shall be given preference in the hearing on appeal over all other appeals, except contested election cases and cases in which the people of the State are parties. 12629.45. The term "securities" as used in this article shall include not only stock of one or more classes issuable by corporations generally but also shares of national mortgage associations or other Federal agencies or corporations organized under Federal authority, whose purposes include the loaning of money on real estate, and also mortgage participation certificates, bonds, notes, debentures, warrants or evidences of indebtedness or of beneficial interests or of any other classes or rights. 12629.46. A mortgage insurer may issue and may invest in, hold, own, sell, exchange or otherwise dispose of, pursuant to a plan approved under this article, any one or more of the above mentioned kinds of securities, regardless of any provisions of the laws of this State to the contrary. None of the provisions of the Corporate Securities Act shall apply to any securities issued pursuant to a plan approved under this article, whether or not such securities are issued by a mortgage insurer, except that brokers, as defined in said act, shall be subject to the provisions of said act with respect to all transactions involving such securities. 12629.47. Any executor, administrator, guardian, conservator, or receiver, and any trustee of any kind or nature, and any insurer, bank, banking institution or trust company, and any officer of the State of California, holding any securities or certificates of a mortgage insurer as a legal investment or as a fund or deposit required by law to be made by the State of California, may, without the necessity of obtaining any specific court approval (a) consent to any plan which has been approved by the court pursuant to Sections 12629.30 to 12629.38, inclusive; (b) exchange any mortgage participation certificates or other securities or rights or claims for certificates, amended certificates or securities issued pursuant to such plan; and (c) may continue to hold as a legal investment or as a fund or deposit required by law to be made with the State of California any certificates, amended certificates or securities so received. 12629.48. No plan shall be operative pursuant to this article unless approved by the court and consented to as required by this article during the emergency period, which period, for the purposes of this article, shall commence with the effective date of this article and shall expire April 1, 1939, or at such earlier date as the commissioner shall find and declare that such emergency period has terminated; provided, however, that if, prior to the expiration or termination of said emergency period, such plan shall have been approved by the superior court, and shall have been consented to as required by this article, such plan shall become operative unless such approval be set aside on appeal, notwithstanding the fact that such approval of the superior court was not final at the expiration or termination of such emergency period.
