In a Memorandum Decision issued April 16, 2012, Judge John M. Galasso of the Nassau County New York State Supreme Court has:
- Declared Executive Life of New York (ELNY) to be insolvent and by order converted the former ELNY rehabilitation proceeding into a liquidation proceeding.
- Appointed the Superintendent of the New York State Department of Financial Services (Superintendent), formerly ELNY's Rehabilitator, to be ELNY's Liquidator.
- Concluded that the Superintendent has complied with New York insurance law in satisfying the framework under which the Superintendent may seek liquidation and the Court may adjudicate the insolvency of an insurer.
- Signed a separate order approving the ELNY restructuring plan as proposed and amended by the Superintendent.
- Directed Counsel for the New York Liquidation Bureau (NYLB) to serve a copy of the decision with notice of entry upon all ELNY payees.
For a copy of Judge Galasso's decision, see the structured settlement wiki.
In his decision, Judge Galasso rejected any possible consideration of an amended or alternative ELNY restructuring plan stating:
"It is important to note that in a liquidation proceeding, the Court’s only authority by law is to approve or disapprove the plan. A court cannot amend or supplement a plan or allow objectors to submit a proposed plan. As noted above, the New York State Superintendent of Financial Services has the sole authority to formulate a plan under the laws of New York and the participating states within the statutory structure."
Judge Galasso's decision does not state state whether the Superintendent and his agents, including the NYLB, will be granted immunity from legal actions related to their acts and omissions in managing ELNY since 1991 during its Rehabilitation. The decision, however, does state:
"...[T]he scope of the hearing before the undersigned was limited by the Insurance Law and could not include inquiries into why the insurer failed in the first instance, its investment and operation prior to failure, how the Superintendent and his agents supervised the affairs of the insurer, or why a settlement was not reached or this order to show cause brought before the Court sooner."
In approving the Superintendent's Plan, Judge Galasso noted:
- The plan will include approximately $900 million of ELNY estate assets; $700 million from participating guarantee associations allocated according to statute; plus $71 million to benefit ELNY payees not covered by any guarantee association.
- In addition, $100 million will be voluntarily contributed by unnamed life insurance companies as a "hardship fund" for the benefit of ELNY shortfall payees, benefits that would not otherwise be available in a straight liquidation process.
- Certain insurance companies, including Travelers, Fireman’s Fund, and Hartford, have assured the Court they will honor their legal obligations under structured settlement funding agreements.
- J. G. Wentworth/Peachtree Funding (JGW), the largest structured settlement factoring company, has also assured the Court that to the extent a shortfall is due to ELNY as creditor under JGW's purchase contracts, JGW will not seek restitution from former ELNY payees that subsequently entered into transfer agreements with JGW. Note, however: Judge Galasso's decision does not state whether structured settlement factoring companies and their investors will receive any payments from state guarantee associations.
- If the Superintendent's restructuring plan is not approved, according to Judge Galasso, there might not be any voluntary enhancements.
- Without the coordination of state insurance guarantee fund coverages (part of NOLHGA's role and mission), individual ELNY shortfall payees would have to apply to their own states to determine the amount of guarantee association contribution they would receive. For some, according to Judge Galasso, the answer might be $0.