Texas Insurance Code
§ 443.260 — SECURED CREDITORS' CLAIMS
IN § 443.260Title 4. REGULATION OF SOLVENCY · Part C. DELINQUENT INSURERS · Ch. 443. INSURER RECEIVERSHIP ACT · Art. F. CLAIMS
Statute text
View on source(a)The value of any security held by a secured creditor must be determined in one of the following ways:
(1)by converting the same into money according to the terms of the agreement pursuant to which the security was delivered to the creditor; or
(2)by agreement or litigation between the creditor and the liquidator.
(b)If a surety has paid any losses or loss adjustment expenses under its own surety instrument before any petition initiating a delinquency proceeding is filed and the principal to the instrument has posted collateral that remains available to reimburse the losses or loss adjustment expenses at the time the petition is filed and that collateral has not been credited against the payments made, then the receiver has the first priority to use the collateral to reimburse the surety for any pre-petition losses and expenses.
(c)If the principal under a surety bond or surety undertaking has pledged any collateral, including a guaranty or letter of credit, to secure the principal's reimbursement obligation to the insurer issuing the bond or undertaking, the claim of any obligee, or subject to the discretion of the receiver, of any completion contractor under the surety bond or surety undertaking must be satisfied first out of the collateral or its proceeds.
(d)In making any distribution to an obligee or completion contractor under Subsection (c), the receiver shall retain a sufficient reserve for any other potential claim against that collateral.
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Legislative history
Acts 2007, 80th Leg., R.S., Ch. 921 (H.B. 3167), Sec. 9.004(hh), eff. September 1, 2007.