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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: April 30, 1998
PROFESSIONAL BENEFITS INSURANCE COMPANY
(Exact name of registrant as specified in its charter)
Commission File Number 0-22344
Texas 74-2072535
(State or other jurisdiction of (I.R.S. employer
incorporation) identification number)
10835 Rockley Road, Houston, Texas 77099
(Address of principal executive offices, including ZIP code)
281/721-1800
(Registrant's telephone number, including area code)
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PROFESSIONAL BENEFITS INSURANCE COMPANY
FORM 8-K
Item 3 - BANKRUPTCY OR RECEIVERSHIP
On April 30, 1998, a Temporary Restraining Order and Order
Appointing Temporary Receiver was issued by the District Court
of Travis County, Texas in relation to Professional Benefits
Insurance Company. The Order appointed the Commissioner of
Insurance as Temporary Receiver.
Item 7 - FINANCIAL STATEMENTS AND EXHIBITS
Exhibit 99.1 Temporary Restraining Order and Order Appointing
Temporary Receiver.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this amendment to be signed on its behalf by the
undersigned thereunto duly authorized.
PROFESSIONAL BENEFITS INSURANCE COMPANY
By: /s/ Neal Rockhold
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Name: Neal Rockhold
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Appointed Representative
Title: of the Temporary Receiver
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Dated: May 15, 1998
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ---------- -----------
<S> <C>
99.1 Temporary Restraining Order and Order Appointing Temporary Receiver
</TABLE>
-2-
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EXHIBIT 99.1
NO. 98-04500
THE STATE OF TEXAS, ) IN THE DISTRICT COURT OF
Plaintiff )
)
VS. ) TRAVIS COUNTY, TEXAS
)
PROFESSIONAL BENEFITS )
INSURANCE COMPANY, )
Defendant ) 201ST JUDICIAL DISTRICT
TEMPORARY RESTRAINING ORDER
AND ORDER APPOINTING TEMPORARY RECEIVER
On this day came to be heard the APPLICATION FOR TEMPORARY RESTRAINING
ORDER AND ORDER APPOINTING TEMPORARY RECEIVER filed by the State of Texas. The
State of Texas appeared by and through its Attorney General, Dan Morales.
The Application requests that a Temporary Restraining Order be issued
against PROFESSIONAL BENEFITS INSURANCE COMPANY, Houston, Texas (hereinafter
referred to as "DEFENDANT"), and that the Commissioner of Insurance of the
Texas Department of Insurance (hereinafter referred to as "Commissioner of
Insurance") be appointed as Temporary Receiver for DEFENDANT.
I.
FINDINGS
1) It appearing that this Court has jurisdiction over the parties and
over the subject matter herein, the Court, after considering the
Plaintiff's verified Petition, is of the opinion and finds that the
law and the facts are what the Plaintiff has alleged in its duly
verified Petition and that Plaintiff is entitled to a Temporary
Restraining Order and an Order Appointing a Temporary Receiver as
granted herein.
2) The Court finds that the Plaintiff, through its Attorney General, Dan
Morales, under the authority granted to him by the Constitution and
laws of this State and at the request of the Commissioner of
Insurance, has a probable right and probably will prevail upon final
hearing of this action and that without the issuance of this temporary
injunctive relief, the
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Plaintiff will probably suffer irreparable injury as set forth herein.
There is no adequate remedy at law.
3) The Court finds that DEFENDANT is insolvent and is not in compliance
with the TEX. INS. CODE ANN. arts. 1.10, Section 5,2.02 and 2.20
(Vernon Supp. 1997). The Court further finds that the continued
operation of DEFENDANT will be hazardous to its policyholders and
creditors, and that unless temporarily restrained, it will continue to
operate in violation of the laws of this State and that it will
continue to create debts and obligations and to deplete the assets of
DEFENDANT, all contrary to the best interests of the policyholders,
creditors and the general public and that by reason of these premises,
immediate and irreparable injury, loss and damage will result to the
policyholders and creditors.
4) The Court further finds that unless DEFENDANT is temporarily
restrained and a Temporary Receiver is appointed for DEFENDANT, the
assets of DEFENDANT may be subject to claims or illegal preferences,
to the immediate and irreparable injury of policyholders and
creditors; and that it is necessary that a Temporary Receiver be
appointed so that the legal obligations of DEFENDANT may be supervised
during the pendency of these proceedings to prevent the waste of
DEFENDANT's assets and to preserve the status quo.
5) Because of the foregoing, the Court finds that there exists an
imperative and immediate necessity to restrain DEFENDANT, without
notice, from conducting any business of DEFENDANT as restrained herein
and to appoint the Commissioner of Insurance as Temporary Receiver of
the affairs of DEFENDANT, without notice, in order to manage,
maintain, and preserve the affairs of DEFENDANT during the pendency of
these proceedings.
6) The Court further finds that the Temporary Receiver is vested by
operation of law with title to all property and assets of DEFENDANT,
and that the Temporary Receiver
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succeeds to all rights of DEFENDANT, including, but not limited to,
the rights of DEFENDANT as a customer of any financial institution.
II.
TEMPORARY RESTRAINING ORDER
It is ORDERED that the Clerk of this Court shall issue a Temporary
Restraining Order against the persons and entities named below, with the
following force and effect:
1. Injunction Against DEFENDANT and Those Related to it
TO: PROFESSIONAL BENEFITS INSURANCE COMPANY, ITS DIRECTORS AND
FORMER DIRECTORS (INCLUDING, BUT NOT LIMITED TO, JAMES O.
HENRY, JR. D.D.S., ROBERT W. LITTLE, D.D.S., WILLIAM L. GLENN,
JR., D.D.S., HOBERT P. LUNDBLADE, D.D.S. AND AGAINST ITS
OFFICERS AND FORMER OFFICERS, INCLUDING BUT NOT LIMITED TO
JERRY CAMPBELL, VICE PRESIDENT, ROBERT W. LITTLE, TREASURER,
WILLIAM L. GLENN, JR., SECRETARY, JERRY RAY, JAMES O. HENRY,
JR., BARHAM RHODES AND TAMMY SKAINS; ITS OFFICERS AND FORMER
OFFICERS (INCLUDING, BUT NOT LIMITED TO; ATTORNEYS;
ACCOUNTANTS; MANAGERS; SUBSIDIARIES; MANAGING GENERAL AGENTS;
REPRESENTATIVES; LOCAL RECORDING AGENTS; EMPLOYEES OR
SERVANTS; STOCKHOLDERS; THIRD PARTY ADMINISTRATORS; ADJUSTERS;
MEMBERS; TRUSTEES; POLICYHOLDERS; ASSOCIATES; AND THOSE ACTING
IN CONCERT WITH THEM:
EACH OF YOU are hereby RESTRAINED and ENJOINED from:
1.(a) Doing, operating, and conducting any business of DEFENDANT under any
charter, permit, license, power or privilege, belonging to, or
heretofore issued by, or to DEFENDANT, or exercising any direction,
control or influence over said business of DEFENDANT;
1.(b) Wasting, disposing of, using, transferring, selling, assigning,
canceling, hypothecating, withdrawing, or allowing to be withdrawn or
concealing, in any manner, or in any way,
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any property of DEFENDANT, also including, but not limited to, that
property which has been acquired, purchased or paid for by DEFENDANT,
whether such property is real, personal, or mixed, of any kind, or
nature, wherever located, all of which property is hereby placed in
custodia legis by virtue of the appointment of the Temporary Receiver,
and title to which property is vested in the Temporary Receiver. Such
property shall also include any claims or causes of action belonging
to, owned by, in the possession of, or claimed by DEFENDANT which
DEFENDANT which might have against any person, firm, association, or
corporation, all of which property is hereby placed in custodia legis,
and title to which property is vested in the Temporary Receiver;
1.(c) Disposing of any account, debt, deposit, share account, trust account,
or any other property you may own, owe to, or hold for the benefit of
DEFENDANT, or any account held individually, jointly, or severally for
DEFENDANT, whether such account, debt, deposit, share account, trust
account, or any other asset is owned, or held for DEFENDANT in the
name of, or for the benefit of DEFENDANT, or under any other name(s),
all of which property is hereby placed in custodia legis, and title to
which property is vested in the Temporary Receiver;
1.(d) Removing from the jurisdiction of this Court, or from the place of
business of DEFENDANT, any office equipment, furniture or fixtures,
books, records, or any other property of any kind or nature
whatsoever, real and personal, belonging to, claimed, or owned by
DEFENDANT, all of which property is hereby placed in custodia legis,
and title to which property is vested in the Temporary Receiver;
1.(e) Doing anything, directly or indirectly, to prevent the Temporary
Receiver or his designees from gaining access to, acquiring, examining
or investigating any books,
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documents, records or other materials concerning DEFENDANT or its
affairs and property under whatever name(s) that may be found. Such
documentary material shall include, but not be limited to, records and
property held by banks, savings and loan associations, trust
companies, credit unions or any other entities or depository
institutions; and
1.(f) Interfering, in any way, with these proceedings or the lawful acts of
the Temporary Receiver or his designees, and from making any claim, or
from commencing, or prosecuting any action or appeal or arbitration,
including administrative proceedings or obtaining any preference,
judgment, attachment, garnishment, or other lien, or from the making
of any levy or foreclosure against DEFENDANT, or against its property,
or any part thereof, or against the Temporary Receiver except by doing
so in the receivership proceedings herein, and from asserting any
claims against DEFENDANT or against the Temporary Receiver thereof,
except in this receivership proceeding as permitted by TEX. INS. CODE
ANN. art. 21.28.
EACH OF YOU are further specifically ORDERED to make available and
disclose to the Temporary Receiver or his designees the nature, amount, and
location of any and all of the property of DEFENDANT, including, but not
limited to, any of the property listed in Subparagraphs 1.(b) through 1.(e)
above, and to immediately surrender all such property to the Temporary Receiver
or his designees.
2. Injunctions Against Financial Institutions
TO: ANY AND ALL BANKS (INCLUDING, BUT NOT LIMITED TO, COMPASS
BANK, HOUSTON, TEXAS, ACCOUNT NUMBERS 713-5149-1, 713-5150-5,
713-5152-1, TEXAS COMMERCE BANK- CHASE, HOUSTON, TEXAS,
ACCOUNT NUMBERS 017-00037275, 017-00037549, 017-00037531,
INTERSTATE/ JOHNSON LANE, ATLANTA,
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GEORGIA, MONEY MARKET ACCOUNT NUMBER 520-00371-77F, SAVINGS
AND LOAN ASSOCIATIONS; TRUST COMPANIES; CREDIT UNIONS; WELFARE
TRUSTS; OR ANY OTHER FINANCIAL OR DEPOSITORY INSTITUTIONS:
EACH OF YOU are hereby RESTRAINED and ENJOINED from:
2.(a) Disposing of, using, releasing, transferring, selling, withdrawing,
allowing to be withdrawn, assigning, canceling, hypothecating, or
concealing, in any manner, or in any way, any property of DEFENDANT,
including, but not limited to, any books, records, equipment, money,
accounts receivable, stocks, bonds, assets, policies of insurance,
notes, and funds of DEFENDANT, whether such property is real,
personal, or mixed, of any kind or nature, wherever located, all of
which property is hereby placed in custodia legis, and title to which
property is vested in the Temporary Receiver;
2.(b) Disposing of any account, debt, deposit, share account, trust account,
or any other property you may own, owe to, or hold for the benefit of
DEFENDANT, or any account held individually, jointly, or severally for
DEFENDANT, whether such account, debt, deposit, share account, trust
account, or any other asset is owned, or held for DEFENDANT in the
name of, or for the benefit of DEFENDANT, or under any other name(s),
all of which property is placed in custodia legis, and title to which
property is vested in the Temporary Receiver;
2.(c) Doing anything, directly or indirectly, to prevent the Temporary
Receiver or his designees from gaining access to, acquiring, examining
or investigating any books, documents, records or other material
concerning DEFENDANT, or its affairs and property under whatever
name(s) that may be found. Such documentary material shall include,
but is not limited to, records and property held by banks, savings and
loan associations, trust companies, credit unions or any other entity
or depository institution, as well as any bank accounts, or any other
assets into which have been transferred, deposited, and/or placed
funds, or other assets belonging to or payable to DEFENDANT or to
which DEFENDANT may have claim or title regardless of under whose
name(s)
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such accounts, debts, deposits, share accounts, safe deposit boxes,
trust accounts, or other assets are held;
2.(d) Transacting any business of DEFENDANT in any manner whatsoever except
pursuant to the specific instructions of the Temporary Receiver or his
designee; and
2.(e) Interfering, in any way, with these proceedings or the lawful acts of
the Temporary Receiver or his designees, and from making any claims or
commencing or prosecuting any action or appeal or arbitration,
including administrative proceedings or obtaining any preference,
judgment, attachment, garnishment, or other lien, or from the making
of any levy or foreclosure against DEFENDANT, against its property, or
any part thereof, or against the Temporary Receiver, whether against
or through DEFENDANT's policyholders, except in this receivership
proceeding as permitted by TEX. INS. CODE ANN. art. 21.28.
EACH OF YOU are further specifically DIRECTED to make available and
disclose to the Temporary Receiver or his designees the nature, amount, and
location of any and all of the property of DEFENDANT, all information relating
to the property and the accounts(s) of DEFENDANT including, but not limited to,
any of the property listed in Subparagraphs 2.(a) through 2.(c) above, and to
immediately surrender all such property of DEFENDANT to the Temporary Receiver
or his designees. The Court further specifically finds and orders that the
Temporary Receiver is vested by operation of law with title to all property and
assets held by and succeeds to the rights of DEFENDANT as the customer of any
financial or depository institution.
3. Injunction Against all Other Parties
TO: ANY AND ALL OTHER PERSONS, ASSOCIATIONS, CORPORATIONS, OR
ANY OTHER LEGAL ENTITIES INCLUDING, BUT NOT LIMITED TO, THE
UNITED STATES POSTMASTER, POLICYHOLDERS, CLAIMANTS, CREDITORS
AND ATTORNEYS ASSERTING CLAIMS AGAINST PROFESSIONAL BENEFITS
INSURANCE COMPANY:
EACH OF YOU are hereby RESTRAINED and ENJOINED from:
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3.(a) Disposing of, using, releasing, transferring, selling, withdrawing,
allowing to be withdrawn, assigning, canceling, hypothecating, or
concealing, in any manner, or in any way, any property of DEFENDANT,
including, but not limited to, any books, records, equipment, money,
accounts receivable, stocks, bonds, assets, policies of insurance,
notes, and funds of DEFENDANT, whether such property is real,
personal, or mixed, of any kind, or nature, wheresoever located, all
of which property is hereby placed in custodia legis, and title to
which property is vested in the Temporary Receiver;
3.(b) Disposing of any account, debt, deposit, share account, trust account,
or any other property you may own, owe to, or hold for the benefit of
DEFENDANT, or any account held individually, jointly, or severally for
DEFENDANT, whether such account, debt, deposit, share account, trust
account, or any other asset is owned, or held for DEFENDANT in the
name(s), or for the benefit of DEFENDANT, or under any other name(s)
all of which property is placed in custodia legis, and title to which
property is vested in the Temporary Receiver;
3.(c) Doing anything, directly or indirectly, to prevent the Temporary
Receiver or his designees from gaining access to, acquiring, examining
or investigating any books, documents, records or other material
concerning DEFENDANT or its affairs and property under whatever
name(s) that may be found. Such documentary material shall include,
but is not limited to, records and property held by banks, savings and
loan associations, trust companies, credit unions or any other
entities or depository institutions, attorneys or any other entities,
as well as any bank accounts, or any other assets into which have been
transferred, deposited and/or placed funds, or other assets belonging
to or payable to DEFENDANT, or to which DEFENDANT may have claim or
title regardless of under whose name(s) such accounts, debts,
deposits, share accounts, safe deposit boxes, trust accounts, or other
assets are held;
3.(d) Transacting any business of DEFENDANT in any manner whatsoever except
pursuant to the specific instructions of the Temporary Receiver or his
designees; and
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3.(e) Interfering, in any way, with these proceedings or the lawful acts of
the Temporary Receiver or his designees, and from making any claims or
commencing or prosecuting any action or appeal or arbitration,
including administrative proceedings or obtaining any preference,
judgment, attachment, garnishment, or other lien, or from the making
of any levy or foreclosure against DEFENDANT, its property, or any
part thereof, or against the Temporary Receiver, whether against or
through DEFENDANT's policyholders, except in this receivership
proceeding as permitted by TEX. INS. CODE ANN. art. 21.28.
EACH OF YOU are further specifically DIRECTED to make available and
disclose to the Temporary Receiver or his designees the nature, amount, and
location of any and all of the property of DEFENDANT, including, but not
limited to, any of the property listed in Subparagraphs 3.(a) through 3.(c)
above, and to immediately surrender all such property of DEFENDANT to the
Temporary Receiver or his designees.
III.
APPOINTMENT OF TEMPORARY RECEIVER
It is further ORDERED, ADJUDGED, and DECREED that the Commissioner of
Insurance, P.O. Box 149104, Austin, Texas 78714-9104, is hereby, appointed as
Temporary Receiver of PROFESSIONAL BENEFITS INSURANCE COMPANY, and granted the
following duties and powers:
1) The Temporary Receiver is authorized and directed to secure and take
control and possession of all property, books, records, assets and
other items in the possession of or belonging to DEFENDANT as
previously described herein, of whatever nature and wherever located,
including, but not limited to, any statutory or special deposits made
by or for DEFENDANT with any officer or agency of any state or the
federal government, banks, savings and loan associations, and other
depositories, any and all bank deposits, collateral or the contents of
any safe deposit boxes in the name of or belonging to DEFENDANT;
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2) The Temporary Receiver is hereby granted and given all equitable
powers and authority under any and all statutes and under the common
law of this State authorizing the appointment of a Receiver, and
particularly all of the powers and authority granted in TEX. INS. CODE
ANN. art. 21.28 et seq. and TEX. CIV. PRAC. & REM. CODE art. 64.001 et
seq., and as representative of DEFENDANT, its policyholders, claimants
and creditors, to preserve, protect, and recover any assets or
property of DEFENDANT, including claims or causes of action belonging
to or that may be asserted by DEFENDANT;
3) The Temporary Receiver is further authorized and directed to file,
prosecute and defend or settle any suit or suits heretofore filed or
which may hereafter be filed by or against DEFENDANT deemed by the
Temporary Receiver to be necessary to protect any of the interests of
DEFENDANT or any property affected thereby, and to take any action
deemed by the Temporary Receiver to be necessary to enforce the terms
of this order, and to preserve all property and assets of DEFENDANT;
4) As provided by TEX. INS. CODE ANN. art. 21.28, the Temporary Receiver
is empowered to conduct the business of DEFENDANT, to administer the
business and operations of DEFENDANT and to employ and pay or
compensate any legal counsel, any accountants, clerks, and/or
assistants, as he deems necessary, and to pay and authorize the
payment of the administrative expenses of the receivership estate to
be paid out of the funds or assets of the DEFENDANT in the possession
of the Temporary Receiver or coming into his possession. The Temporary
Receiver is additionally empowered to open any and all mail addressed
to DEFENDANT, intended for DEFENDANT, or arriving at the address of
DEFENDANT;
5) It is further ORDERED that the Temporary Receiver appointed herein,
shall be authorized to supervise, suspend, exclude or terminate any or
all of the employees, officers and/or directors of the DEFENDANT, or
any one of them, and to employ such necessary employees, and to pay
their salaries and related reasonable and necessary fees
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out of the funds or assets of DEFENDANT in the possession of the
Temporary Receiver, or coming into his possession, as he deems
necessary in the enforcement of his duties; and
6) It is further ORDERED that the Temporary Receiver appointed herein
shall be authorized to remove from the premises of the DEFENDANT all
books and/or records which relate to or are connected with the
business of the DEFENDANT and which belong to or are in the possession
of the DEFENDANT, and to secure the premises of DEFENDANT as he deems
necessary to preserve and protect the assets, books and/or records of
DEFENDANT.
The Court finds that the Commissioner of Insurance, as Temporary
Receiver, has designated Neal W. Rockhold, Deputy Commissioner, and his staff,
to perform the duties of the Receiver. Neal W. Rockhold and his staff have all
the powers of the Receiver under this Temporary Restraining Order and Order
Appointing Temporary Receiver.
The Court does not require the Commissioner of Insurance to file a
bond as permitted by the TEX. INS. CODE ANN. art. 21.28, Section 2(d). The
Commissioner of Insurance shall take an oath that he will faithfully perform
the duties of Temporary Receiver in this cause and upon the taking of such oath
and the filing of it, the Temporary Receiver will be fully qualified and
empowered to take charge of all of the assets and other properties of the
DEFENDANT in the manner herein provided and to function as Temporary Receiver
herein.
It is further ORDERED that this Order directing the Temporary Receiver
to take possession of the affairs and assets of the DEFENDANT shall continue in
full force and effect until further Order of this Court.
IT IS FURTHER ORDERED that the Temporary Receiver has the authority to
enter into any contracts which he deems necessary to perform the duties of
Temporary Receiver, and that any Special Deputy Receiver appointed under TEX.
INS. CODE ANN. art. 21.28 shall be vested with all of the Temporary Receiver's
rights and powers, subject to any limitations imposed by the Temporary
Receiver.
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IV.
OTHER ORDERS
It is hereby further ORDERED that anyone over the age of 18 who is not
a party to nor interested in the outcome of this suit may serve all citations
and notices in this cause.
It is further ORDERED that the Attorney General shall have a claim
against DEFENDANT for all costs incurred in connection with the application,
including reasonable attorneys' fees, investigative costs and court costs,
pursuant to TEX. CIV. PRAC. & REM. CODE ANN. Section Section 64.051 and 66.003,
and TEX. GOV'T. CODE Section 402.006, subject to the provisions of TEX. INS.
CODE ANN. art. 21.28.
No bond being required by the State of Texas, this Temporary
Restraining Order shall issue and become effective immediately; and the
Commissioner of Insurance, as Temporary Receiver, shall carry out his duties in
accordance with the terms of the above Order. The Court finds that the
Commissioner of Insurance, as Temporary Receiver, has appointed Neal W.
Rockhold, Deputy Commissioner, as his designee.
It is further ORDERED that this Temporary Restraining Order here and
now granted shall continue in effect by order of this Court for 14 days or
until the completion of the hearing on the Temporary Injunction.
Hearing on Plaintiff's Application for a Temporary Injunction is set
for the 13th day of May , 1998, at 2 o'clock p.m., at which time this Court
shall also consider whether the appointment of the Commissioner of Insurance as
Temporary Receiver shall be continued.
All of the foregoing is subject to further order of this Court.
SIGNED at Austin, Travis County, Texas, on this the 30 day of April ,
1998, at 8:25 A.m.
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DISTRICT JUDGE PRESIDING
