Section R20-5-1135. Plan of Action for Retaining Self-insurance Authority in the Event of Insolvency or Bankruptcy

A.      If a self-insurer becomes insolvent or files for protection under the United States Bankruptcy Code seeking to reorganize, and desires to remain self-insured, it shall file with the Division a written Letter of Intent regarding its intent to reorganize under the applicable provisions of the United States Bankruptcy Code.

1.        If the self-insurer is incorporated, the chief executive offi- cer shall sign the Letter of Intent and the board of direc- tors shall approve the Letter if the corporation is still operating;

2.        If the self-insurer is not incorporated, an authorized rep- resentative of the self-insurer shall sign the Letter of Intent; or

3.        An attorney representing the entity in its bankruptcy reor- ganization case may sign the Letter of Intent instead of the chief executive officer or authorized representative.

B.       The self-insurer shall file the Letter of Intent with the Division within 10 days of the initial bankruptcy filing or insolvency proceeding.

C.      The self-insurer shall ensure that a provision addressing the self-insurer’s obligations to workers’ compensation claimants and the Commission is included in the Plan of Reorganization filed with the United States Bankruptcy Court. This Plan shall state the self-insurer’s intentions and financial ability to con- tinue self-insurance.

D.      During the period between the initial bankruptcy filing and the approval of a Plan of Reorganization or Plan of Liquidation, the self-insurer may continue its self-insurance status only upon the demonstration of adequate protection to cover its cur- rent workers’ compensation claims, or those claims that may come due before the Bankruptcy Court approves the Reorgani- zation or Insolvency Plan. As part of the adequate protection for the Commission, the self-insurer shall post or deposit addi- tional security in an amount the Commission deems necessary to pay claims currently pending or anticipated before the approval of the Plan of Reorganization or liquidation.

E.       The self-insurer, or its legal representative, shall send a copy of the proposed Plan of Reorganization or Liquidation, includ- ing amendments to the Division.

F.       The Commission may file an Objection to the Plan of Reorga- nization in the appropriate bankruptcy court and take other actions as permitted under the United States Bankruptcy Code if it determines that the Plan of Reorganization or Liquidation does not adequately provide for the processing and payment of the self-insurer’s workers’ compensation claims.

Historical Note

New Section made by final rulemaking at 11 A.A.R.

1008, effective April 4, 2005 (Supp. 05-1).