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Case 3:00-cv-02009-EBB

Document 55-2

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IN THE CHANCERY C HIN

PETITIONER
VS.

CIV

ACTION NO.

07

/ d-

FRAKLIN PROTECTIVE LIFE
INSURACE COMPAN
A Mississippi Domiciled Insurance Company
RESPONDENT

ORDER OF REHABILITATION
The Cour enters ths Order on Petition of George Dale , Commissioner ofInsurance for
State of
the

Mississippi (" Commissioner "

or " Petitioner

) for the

conservation and complete

management of all assets and affairs of Franin Protective Life Insurance Company (" FPLIC" or
Company " or " insurer ). It appearng to the Cour that the management of Franin Protective Life

Insurance Company is unable to substantiate to the Commissioner of Insurance of the State
Mississippi the asset capitalization that it has claimed in communications submitted to the

Mississippi Deparment of Insurance , and fuher , that this rehabilitation is in the best interest of
FPLIC , its policyholders and the public , IT IS HEREBY ORDERED as follows:

This Order of Rehabilitation (" Rehabilitation Order
provisions of

) is entered into pursuant to

the

Miss. Code An. 9 83- 24- et seq . (Rev. 1991).

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11.

George Dale , as Commssioner ofInsUfance of the State of Mississippi , is hereby appointed

Rehabilitator of Respondent ,

Franin Protective Life Insurance Company, with all the powers and
83-24- et seq . The Rehabilitator shall tae
possession

immunties set

fort in

Miss. Code An.

of the assets of the insurer and manage them under the general supervision of the cour. By
operation of law , title to all assets of FPLIC is hereby vested in the Rehabilitator.
n1.

The Rehabilitator may appoint a Deputy Rehabilitator. The Deputy Rehabilitator shall have

all powers and responsibilities of the Rehabilitator granted by this Order and all such authority as conferred by operation of law. The Commissioner retains the right to substitute another person as

Deputy Rehabilitator as he may deem necessar.

The compensation of

any Deputy Rehabilitator

shall be fixed by the Commssioner with approval of the Court , and shall be paid from the fuds of

FPLIC. The person appointed by the Commissioner pursuant to ths paragraph shall serve at the
pleasure of the Commissioner as set forth at

Miss. Code An.

83- 24- 27(1).

The Rehabilitator and

Deputy Rehabilitator shall have all constitutional and statutory immunities.
IV.

FPLIC , its offcers , directors , agents , stockholders , employees , and all other persons are

hereby enjoined and restrained from the transaction of any of the business of FPLIC. Furher
FPLIC , its offcers , directors , agents , stockholders , employees , and all other persons are hereby

enjoined and restrained from transferring or disposing of FPLIC assets , propert, books , records
electronic media or other information , wherever located (without the express permssion of the

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Rehabilitator), wasting FPLIC assets , or transferrng or dissipating any of FPLIC's assets or
accounts.

ban

Any cour in ths state before which any action or proceeding in which FPLIC is a par,

or

is obligated to defend a par, is pending when this Rehabilitation Order agaist FPLIC is entered

shall stay the action or proceeding for 90 days and such additional time as is necessar for the
Rehabilitator to obtan proper representation and prepare for fuer proceedings. The Rehabilitator
shall take such action respecting the pending litigation deemed necessar in the interest of justice

and for the protection of creditors , policyholders , and the public. Durng this 90 day stay, and such
additional time as determined necessar by the Cour , all persons are enjoined and restrained from

the institution or prosecution of any actions or proceedings.
VI.

The Rehabilitator shall imediately consider all litigation pending outside ths state and shall
petition the cours having jursdiction
over that

litigation for stays whenever necessar to protect the

estate of the insurer.
VII.
Pursuant to

Miss. Code

. 9 83- 24- 13 (Rev. 1991) all offcers , directors , agents , and

employees of Respondent ,

FPLIC , are hereby ordered to make available to the Rehabilitator all

books , accounts , documents , electronic media, or other records or information or propert pertnig

to FPLIC ,

wherever located ,

including any books ,

accounts ,

documents or other records or

information or other propert of FPLIC in the possession

of accountants , accounting firms

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investment advisors , or any person or entity with which FPLIC has a contract for services or has
provided services to FPLIC.
VIII.

If it appears to the Rehabilitator that there has been criinal
of any contractul or fiduciar
obligation detrimental

or

tortious conduct , or breach

to the insurer by any offcer , manager, agent

broker , employee , or other person , all appropriate legal remedies may be pursued on behalf of the
Insurer.
IX.
All insurance agents ,

agencies , brokers , bans , securty dealers , service providers and all

other persons are hereby ordered to account to the Rehabilitator for all ftds of FPLIC held by them
in their fiduciar
capacity or due

to FPLIC. As said fuds are vested in the Rehabilitator as provided
be

by law , it is Ordered that such fuds

directed and forwarded by such insurance agents , agencies

brokers , bans , securty dealers , service providers and all other persons to the Rehabilitator.

The Rehabilitator is hereby authorized to take any and all action he deems necessar or
appropriate to reform and revitalize FPLIC. He shall have all the powers of the directors , offcers
and managers whose authority shall be
suspended , except as they are redelegated by the

Rehabilitator. He shall have full power to direct and manage , hie and discharge employees subject

to any contract rights they may have , and deal with the propert

and

business of the insurer.

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XI.

The Rehabilitator is hereby authorized to void and set aside all fraudulent or improper
transfers made or obligations incurred by FPLIC , as defined by
(Rev. 1991).

Miss. Code An. ~ 83-24-27(6)

XII.

The Rehabilitator, in accordance with
set forth therein ,

Miss. Code An. ~ 83-24- et seq . and the limitations

is hereby authorized to recover on behalf of the insurer the amount of any

improper , unauthorized or fraudulent distrbutions.
XIII.
The Rehabilitator , pursuant to the authority under
hereby authorized to examine the affais ,

Miss. Code An.

9 83- 24-

et seq , is

transactions , accounts , records , documents , and other assets

of FPLIC , its parent , subsidiares , and afliates to determine whether any dividends or other
distributions made by FPLIC to its parent , subsidiaries , or afliates are
Code Ann.
recoverable under

Miss.

83- 24- et seq
XIV.

All reasonable expenses of any litigation , including attorney s fees and costs incured

by the

Rehabilitator, now or in the futue , related to or arsing out of ths rehabilitation shall be paid out of

the fuds or assets of FPLIC or pursuant to assessments authorized
(Rev. 1991).

by

Miss. Code An.

~ 83-24-

xv.
FPLIC's directors , offcers , employees , or other authorized representatives may not take any

action which might lessen the value of FPLIC assets or prejudice the rights of policyholders

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creditors , or shareholders , or the administration of ths

proceeding, including but not

limted to

solicitation of offers and negotiation of terms for the purchase of FPLIC or FPLIC's policyholders

without the express permission of the Rehabilitator.
XVI.

FPLIC , its officers , directors , agents , stockholders , employees , and all other persons are
hereby enjoined and restrained from interfering with the Rehabilitator other than though Petition
of this Cour. XVII.
The Commissioner is relieved from giving bond and he shall be allowed his expenses related

to this action , including without limitation , examination , expert , and attorney s fees , from FPLIC
funds pursuant to

Miss. Code Ann . ~ 83- 24- 27 (Rev. 1991). The Rehabilitator may employ such

clerks , assistts and clerical help as necessar, and the compensation of such clerks , assistants , and

clerical help shall be paid from the fuds of
1991 ).

FPLIC pursuant to

Miss. Code

. ~ 83- 24- 27 (Rev.

XVIII.

The Rehabilitator shall report to the Cour regarding the status of the rehabilitation at such
intervals as the cour specifies from the
date of

ths Rehabilitation Order, and provide an accounting

to this Cour on a semi-anual basis

, pursuant to

Miss. Code An. ~ 83-24- 25(2)
XIX.

(Rev. 1991).

Ths Court shall retain exclusive jursdiction , as provided in
(Rev. 1991), to determine

Miss. Code An. ~ 83- 24- 25(1)
of ths Order or any

all suits or motions related to the enforcement

litigation related to FPLIC or the Rehabilitator

and his deputies , agents , employees , or

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representatives , which shall be determned in ths

rehabiltation proceeding;

provided fuer that

this proceeding including all petitions , orders and other fied papers shall be considered public
records until further order of this cour otherwse providing.
This Order of Rehabilitation is entered this

/01..
day of May,

day of May, 1999.

SO ORDERED

this

/of!

999.

Chancellor First Judicial Distrct, Hinds Coun
PRE

5S t
:1

Lee Harell

:J

Special Assistant Attorney General Chief Legal Counsel for Mississippi Deparent of Insurance Post Offce Box 79 Jackson , Mississippi 39205 6011359- 3577 Miss. Bar No. 8957

Dave Scott Special Assistat Attorney General Attorney for Mississippi Deparent of Insurance Post Offce Box 79 Jackson , Mississippi 39205 6011359- 3577 Miss. Bar No. 8765

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