SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 24, 1996
SUNSTATES CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-5300 22-1664434
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
4600 Marriott Drive, Suite 200, Raleigh, North Carolina 27612
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 919-781-5611
(Former name or former address, if changed since last report.)
<PAGE>
Item 3. Bankruptcy or Receivership
Effective Monday, December 2, 1996, Sunstatates' insurance subsidiaries,
Coronet Insurance Company, National Assurance Indemnity Company, Crown
Casualty Company (collectively referred to as Coronet), as well as Casualty
Insurance Company of Florida, each voluntarily suspended issuing all new or
renewal policies. Coronet informed the Illinois Department of Insurance
that its continuing underwriting losses coupled with declines in the value
of its investment portfolio had reduced its statutory surplus to less than
the minimum amounts required under insurance regulations. On December 3,
1996, the Illinois Department of Insurance issued a Cease and Desist Order
prohibiting Coronet from issuing new or renewal policies in any of the 28
states in which it is authorized to conduct business.
On December 10, 1996, Coronet consented to an Order of Conservation
appointing the Director of Insurance of the State of Illinois as Conservator
of Coronet. The Order of Conservation authorized the Conservator to take
possession and control of the property, books, records and assets of Coronet
and to supervise their business and affairs in an effort to conserve their
assets. The Order contained a temporary moratorium upon the payment of all
claims and loss related expenses subject to certain hardship provisions as well
as other contractual obligations of Coronet, until further order of the court,
as well as an injunction prohibiting suits against Coronet outside of the
conservation proceedings. Under the terms of the Order, Coronet was
allowed to continue its efforts to secure approximately $20 million of new
capital to allow Coronet to resume writing new or renewal policies. However,
if Coronet was unsuccessful in obtaining such capital prior to December 23,
1996, the Director of Insurance was authorized to initiate the liquidation of
Coronet.
Coronet was unable to secure the new capital and on December 24, 1996, the court
issued an Agreed Order of Liquidation With A Finding of Insolvency whereby
the Director of Insurance of the State of Illinois was appointed as Liquidator
of Coronet. The Liquidator was authorized and directed to take immediate
possession and control of the property, books, records, accounts, business
affairs and all other assets of Coronet and to marshall and liquidate the
assets, business and affairs of Coronet pursuant to the provisions of
Article XIII of the Illinois Insurance Code.
At September 30, 1996, Coronet's statutory statements reflected total assets of
$51,136,341 and total liabilities of $59,182,743.
Similarly, on January 3, 1997, an Agreed Order of Liquidation With A Finding
Of Insolvency was entered by the Court with respect to National Assurance
Indemnity Company, a wholly-owned insurance susidiary of Coronet. The terms
of such order were substantially identical to the terms of the Coronet order.
Item 7. Financial Statements and Exhibits
(c) Exhibits
2. Agreed Order of Liquidation With A Finding of Insolvency
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
SUNSTATES CORPORATION
/s/ Glenn J. Kennedy
Date: January 8, 1997 Glenn J. Kennedy
Chief Financial Officer
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
EXHIBITS
FORM 8-K
CURRENT REPORT
Date of Report Commission File Number
December 24, 1996 1-5300
SUNSTATES CORPORATION
EXHIBIT INDEX
Exhibit No. Exhibit Description
2 Agreed Order of Liquidation With A Finding Of Insolvency
IN THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS
COUNTY DEPARTMENT, CHANCERY DIVISION
PEOPLE OF THE STATE OF ILLINOIS, ex rel. MARK BOOZELL, DIRECTOR OF
INSURANCE OF THE STATE OF ILLINOIS,
Plaintiffs,
CORONET INSURANCE COMPANY, an Illinois
Domestic Stock, Property and Casualty Insurance
Company,
Defendant.
NO: 96 CH 13422
AGREED ORDER OF LIQUIDATION
WITH A FINDING OF INSOLVENCY
THIS CAUSE COMING ON TO BE HEARD upon the Verified Complaint For
Liquidation, filed herein by the PEOPLE OF THE STATE OF ILLINOIS upon the
relation of MARK BOOZELL, Director of Insurance of the State of Illinois,
seeking an order authorizing and directing the Director of Insurance to
take possession and control of the property, books, records, accounts,
assets, business and affairs of CORONET INSURANCE COMPANY, and to
liquidate its assets pursuant to the provisions of Article XIII of the
Illinois INSURANCE CODE (hereinafter the "Code"), 215 ILCS 5/187, ET SEQ.,
and further to protect the interests of Coronet Insurance Company's
policyholders and creditors, and of the public; the Court having
jurisdiction over the parties hereto and the subject matter hereof; the
Court having reviewed the pleadings filed herein and having considered
arguments of counsel thereon, and the Court then being otherwise advised
in the premises, and for good cause appearing therefore;
THE COURT FINDS:
I That the Relator, Mark Boozell, is the Director of Insurance of
the State of Illinois (hereinafter "Director") and, as such, is charged
under 215 ILCS 5/401 and 20 ILCS 1405/56 with the rights, powers and
duties appertaining to the enforcement and execution of all of the
insurance laws of the State of Illinois.
2. That the Defendant, Coronet Insurance Company (hereinafter
"Coronet") is a stock, property and casualty insurance company organized
under and existing by virtue of the laws of the State of Illinois, having
its principal place of business in the City of Chicago, County of Cook,
State of Illinois, and is authorized to transact the kinds of insurance in
the State of Illinois as set forth by 215 ILCS 5/9 and, as such, is a
domestic company as defined by 215 ILCS 5/2(f).
3. That, pursuant to Section 190 of the Code, 215 ILCS 5/190, the
facts stated in the Complaint and the Exhibit(s) thereto are to be taken
as prima facie evidence of the facts therein recited, and no evidence to
the contrary having been offered, the Court finds therefrom as follows:
(a) That for the reasons stated in the record herein, sufficient cause
exists under Section 188 of the Code, 215 ILCS 5/188, for the entry of an
order of liquidation against the Defendant, Coronet, based upon, without
limitation, the following facts and circumstances:
(I) the Defendant, Coronet, is Insolvent;
(ii) the Defendant, Coronet, is found to be in such condition that
its further transaction of business would be hazardous to its
policyholders, or to its creditors, or to the public;
(iii) the Defendant, Coronet, is found to be in such condition
that it could not meet the requirements for organization and authorization
as required by law;
(iv) the Defendant, Coronet, has consented by a majority of its
directors to the entry of this Order of Liquidation With a Finding of
Insolvency.
(b) That the Director has determined that a successful
rehabilitation of Coronet is not feasible.
(c) That it is in the best interest of the Defendant, Coronet, its
policyholders, creditors, and the public that it be placed into
liquidation in accordance with the provisions of Article XIII of the Code,
SUPRA.
(d) That, by the entry of this Order of Liquidation With a Finding of
Insolvency, the protection of the Illinois Insurance Guaranty Fund and/or
the protection of similar organizations in any other state, as defined by
their respective statutory provisions, are implemented effective upon the
date of the entry of this Order.
IT IS, THEREFORE, ORDERED, ADJUDGED AND DECREED:
A. That sufficient cause exists for the entry of an order of
liquidation with a finding of insolvency against the Defendant, Coronet,
and that this Order of Liquidation be and the same is hereby entered as,
to and against Coronet Insurance Company, with a finding of insolvency;
B. That Mark Boozell, Director of Insurance of the State of
Illinois, and his successors in office, be and the same are hereby
appointed as Liquidator of the Defendant, Coronet (hereinafter "Director"
or "Liquidator"), and are hereby authorized and directed to take immediate
possession and control of the property, books, records, accounts, business
and affairs, and all other assets of Coronet, and of the premises occupied
by Coronet for the transaction of its business, and to marshall and
liquidate the assets, business and affairs of Coronet pursuant to the
provisions of Article XIII of the ILLINOIS INSURANCE Code, 215 ILCS 5/187,
ET SEQ.; and to take such further action as the nature of the cause and
the interests of Coronet, its policyholders, creditors and stockholders,
or the general public may require, subject to the further orders of this
Court; further, that the Director is hereby vested, as Liquidator, with
title to all property, assets, contracts and rights of action of the
Coronet, and that he is hereby authorized to deal with the property,
assets, business and affairs of Coronet, and to sue and defend for
Coronet, or for the benefit of Coronet's policyholders and creditors, in
the courts in his name as the Liquidator of Coronet, or in the name of
Coronet;
C. That the Defendant, Coronet, its directors, officers, trustees,
agents, servants, representatives, employees, affiliated companies and all
other persons and entities, are hereby directed and ordered to give
immediate possession and control to the Liquidator of all property, books,
records, accounts, business and affairs, and all other assets of the
Defendant, Coronet, and of any and all premises occupied by the Defendant,
Coronet, for the transaction of its business;
D. That all agents, accountants, auditors and attorneys of the
Defendant, Coronet, are hereby ordered to deliver to the Director copies
of all documents, records and files in their possession or under their
control concerning or relating to the Defendant, Coronet, and to provide
the Director with such information as he may require concerning any and
all business and/or professional relationships between them and the
Defendant, Coronet, and concerning any and all activities, projects, jobs
and the like undertaken and/or performed by them at the request of
Coronet, or Coronet's officers, directors, agents, servants,
representatives and/or employees, or which Coronet is, or may be, entitled
to as the result of its relationship with such agents, accountants,
auditors and attorneys;
E. That the Defendant, Coronet, its directors, officers, agents,
employees, representatives and servants, and all other persons and
entities, are hereby restrained and enjoined from further transacting the
business of Coronet, or dealing with, or disposing of, the property or
assets of Coronet, whether real, personal or mixed, without the express
written consent of the Liquidator; or doing, or permitting to be done, any
action which might waste or conceal the property or assets of Coronet,
until further order of this Court;
F. That the Director, as Liquidator, is hereby vested with the
rights, title and interest in all funds recoverable under treaties,
contracts and agreements of reinsurance heretofore entered into by or on
behalf of Coronet as the ceding insurer, and that all reinsurance
companies involved with Coronet are hereby restrained and enjoined from
making any settlements with any claimant or policyholder of Coronet, or
any other person, other than the Director as Liquidator, except with the
written consent of the Director;
G. That all contracts, treaties and agreements of reinsurance
wherein Coronet was, or is, the assuming or retrocessional reinsurer are
hereby cancelled on a "cut off' basis, such cancellation to be effective
upon the date of the entry of this Order; further, that all other
treaties, contracts and agreements of reinsurance, wherein Coronet is the
ceding company, shall remain in full force and effect pending a
determination and recommendation by the Director as to when, and upon what
terms, cancellation is appropriate;
H. That all banks, brokerage houses, financial institutions and all
other persons, companies or entities, having in their possession accounts
or any other assets which are, or may be, the property of the Defendant,
Coronet, are hereby directed and ordered to immediately turn over and
deliver the possession and control of all such accounts and assets to the
Liquidator; and said banks, brokerage houses, financial institutions and
all other persons, companies and entities are hereby restrained and
enjoined from disbursing or disposing of said accounts or assets, without
the written approval of the Liquidator; and all such persons, companies
and entities are further enjoined and restrained from disposing of, or
destroying, any records pertaining to any business transactions between
the Defendant, Coronet, and all such banks, brokerage houses, financial
institutions and any other persons, companies or entities having done
business, or doing business, with the Defendant, Coronet, without the
express consent of the Liquidator, or until further order of this Court;
I. That all agents and brokers of the Defendant, Coronet, and their
respective agents, employees, representatives and servants, and all other
persons and entities, are hereby restrained and enjoined from returning
any premium, earned or unearned, or any other money in their possession,
or under their control, collected in connection with policies, contracts,
certificates or treaties of insurance or reinsurance previously issued, or
to be issued, by Coronet to policyholders or others, and said agents and
brokers, and their respective agents, employees, representatives and
servants, arid all other persons and entities, are hereby directed to
immediately turn over all such funds in their possession, or under their
control, or to which they may hereafter acquire possession or control, to
the Liquidator, in gross and not net of any commissions which may be due
thereon, subject to the provisions of 215 ILCS 5/206, until further order
of this Court;
J. That all persons, companies and entities are hereby restrained
and enjoined from bringing, asserting or further prosecuting, any claim,
action or proceeding, at law or in equity or otherwise, whether in this
State or elsewhere, against the Defendant, Coronet, or its property or
assets, or the Director as its Liquidator, except insofar as those claims,
actions or proceedings arise in or are brought in these liquidation
proceedings; from obtaining, asserting or enforcing preferences,
judgments, attachments, or other like liens or encumbrances, including
common law retaining liens, or the making of any levy against the
Defendant, Coronet, or its property and assets while in the possession and
control of the Director; from interfering, in any way, with the Director's
conduct of the liquidation of Coronet; and from interfering, in any way,
with the Liquidator in his right, title and interest to, and possession
and control of, the property, books, records, accounts, premises and all
other assets of the Defendant, Coronet, until further order of this Court;
K. That all persons, companies and entities, including policyholders
of Coronet, and all persons asserting claims against such policyholders,
are hereby restrained and enjoined from instituting or pursuing any action
or proceeding in any court or before any administrative agency, including
boards and commissions administering worker's compensation or occupational
diseases or similar laws of the State of Illinois, or of any other state
or of the United States, which seek in any way, directly or indirectly, to
contest or interfere with the Director's exclusive right, title, and
interest to funds recoverable under treaties and agreements of reinsurance
heretofore entered into by or on behalf of Coronet as the ceding insurer;
L. That the rights and liabilities of Coronet, and of its
policyholders, creditors, and stockholders, and of all other persons
interested in Coronet's property or assets are hereby fixed as of the date
of the entry of this Order of Liquidation, except as provided in Paragraph
(M) herein, or as may otherwise be provided by further order of this
Court;
M. That all direct policies and/or certificates of insurance
heretofore issued by Coronet are hereby cancelled upon the following
terms:
1 . All direct policies and/or certificates of insurance which
may give rise to "covered claims", as defined in Sections 534.3 and 537.2
of the Code, 215 ILCS 5/554.3 and 5/537.2, of the Illinois Insurance
Guaranty Fund or which may give rise to "covered claims" of a similar
organization in any other state, as defined by the provisions of such
similar statute in any such other state, are hereby cancelled:
(a) At 12:01 a.m., local time of the insured or
policyholder of any such direct policy and/or certificate of insurance,
thirty-one (31) days after the date this Order of Liquidation is entered;
or
(b) Upon the expiration date of any such direct policy
and/or certificate of insurance, if the expiration date is less than
thirty-one (31) days after the date of the entry of this Order of
Liquidation; or
(c) Upon the date the insured or policyholder of any such
direct policy and/or certificate of insurance replaces the direct policy
and/or certificate of insurance, or on request effects cancellation, if
the insured or policyholder does so within thirty-one days after the date
of the entry of this Order of Liquidation, whichever is earlier.
2. All other direct policies and/or certificates of insurance issued
by Coronet are hereby cancelled effective upon the date of the entry of
this Order of Liquidation.
N. That this Order of Liquidation With a Finding of Insolvency is
hereby deemed a final order within the meaning of Illinois Supreme Court
Rule 307(a)(5), and that there be no just reason for delaying enforcement
and/or appeal hereof;
0. That the Director's operation of Coronet during the conservation
proceeding and all acts taken by the Director and his deputies, agents,
employees, attorneys, assistants and clerks in connection with such
operation, are hereby approved; and further, that the Director is hereby
authorized to pay administrative expenses, upon such subsequent approval
of this Court as is necessary pursuant to Section 202 of the Code, 215
ILCS 5/202, including all attorneys' fees, accounting fees, consulting
fees, and other administrative expenses incurred during the course of
conservation;
P. That the Director, as Liquidator, is hereby directed and
authorized to wind down and terminate Coronet's business and affairs, and
to make the continued expenditure of such wages, rents and expenses as he
may deem necessary and proper for administration of the liquidation of
Coronet;
Q. That the Director, as Liquidator, is hereby directed to make
periodic reports to this Court of the status of Coronet while in
liquidation, and the Director, as Liquidator, is further directed to file
with this Court, for its consideration, periodic reports of the
Liquidator's receipts and disbursements of Coronet;
R. That the Director, as Liquidator, is hereby authorized to pay,
from the assets of the Defendant, Coronet, those expenses incurred during
the course of the liquidation of Coronet, including but not limited to,
attorneys' fees, accounting fees and consulting fees, as administrative
expenses, pursuant to and in a manner consistent with the provisions of
Section 202 of the Code, 215 ILCS 5/202;
S. That the Director, as Liquidator, is hereby authorized to sell,
at a reasonable price, any items of personal property of Coronet having a
market value of the amount of Twenty Five Thousand ($25,000.00) Dollars,
or less, without the prior approval of this Court, and the Director, as
Liquidator, is hereby authorized to abandon or dispose of any items of
personal property of Coronet having no sale value whatsoever, without the
prior approval of this Court, and that any such sale, abandonment or
disposal of the personal property of Coronet shall be reported by the
Liquidator to this Court in his periodic reports of the receipts and
disbursements of Coronet;
T. That all costs of these proceedings are hereby taxed and assessed
against the Defendant, Coronet;
U. That hereafter the caption in this cause and all pleadings filed
in this matter shall read:
"IN THE MATTER OF THE LIQUIDATION
OF CORONET INSURANCE COMPANY"
V. That the Order of Conservation, entered by this Court on December
10, 1996, be and the same is hereby terminated, as to Coronet, effective
upon the entry of this Order; and further, that the provisions of said
Order of Conservation, as they apply to Coronet, are hereby superseded by
the provisions of this Order of Liquidation.
W. That this Court shall retain jurisdiction in this cause for the
purpose of granting such other and further relief as the nature of the
cause and the interests of the Defendant, Coronet, its policyholders,
creditors and stockholders, or of the public, may require.
ENTERED:
December 24, 1996
Lester D Foreman #443
Judge Presiding
James E. Ryan
Attorney General of Illinois
Attorney for the PEOPLE OF
THE STATE OF ILLINOIS
Roger P. Flahaven
Andrew N. Levine
Assistant Attorneys General
100 West Randolph Street
Thirteenth Floor
Chicago, Illinois 60601
(312) 814-2822
Attorney Code #99000
OF COUNSEL:
Peter G. Gallanis
Dale A. Coonrod
Counsel to the Receiver
222 Merchandise Mart Plaza
Suite 1450
Chica@o, Illinois 60654
(312) 836-9500
Attorney Code # 16819
