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PAG LIN 1 1 Section 1. Section 523A.1, unnumbered paragraphs 1 and 4, 1 2 Code 1995, are amended to read as follows: 1 3 1. Whenever an agreement is made by any person, firm, or 1 4 corporation to furnish, upon the future death of a person 1 5 named or implied in the agreement, funeral services or funeral 1 6 merchandise, a minimum of eighty percent of all payments made 1 7 under the agreement shall be and remain trust funds until 1 8 occurrence of the death of the person for whose benefit the 1 9 funds were paid, unless the funds are sooner released to the 1 10 person making the payment by mutual consent of the parties. 1 11 Payments otherwise subject to this section are not exempt 1 12 merely because they are held in certificates of deposit. The 1 13 commissioner may adopt rules to prohibit the commingling of 1 14 trust funds with other funds of the seller. 1 15 This section does not apply to payments for merchandise de- 1 16 livered to the purchaser.DeliveryExcept for caskets and 1 17 other types of inner burial containers or concrete burial 1 18 vaults sold after July 1, 1995, delivery includes storage in a 1 19 warehouse under the control of the seller or any other 1 20 warehouse or storage facility approved by the commissioner 1 21 when a receipt of ownership in the name of the purchaser is 1 22 delivered to the purchaser, the merchandise is insured against 1 23 loss, the merchandise is protected against damage, title has 1 24 been transferred to the purchaser, the merchandise is 1 25 appropriately identified and described in a manner that it can 1 26 be distinguished from other similar items of merchandise, the 1 27 method of storage allows for visual audits of the merchandise, 1 28 and the annual reporting requirements of section 523A.2, 1 29 subsection 1, are satisfied. 1 30 Sec. 2. Section 523A.1, Code 1995, is amended by adding 1 31 the following new subsection: 1 32 NEW SUBSECTION. 2. An agreement may be funded by 1 33 insurance proceeds derived from a policy issued by an 1 34 insurance company authorized to conduct business in this 1 35 state. Such funding may be in lieu of a trust fund if the 2 1 payments are made directly to the insurance company by the 2 2 purchaser of the agreement. 2 3 Sec. 3. Section 523A.2, subsection 1, paragraphs a and c, 2 4 Code 1995, are amended to read as follows: 2 5 a. All funds held in trust under section 523A.1 shall be 2 6 deposited in a state or federally insured bank, savings and 2 7 loan association, or credit union authorized to conduct 2 8 business in this state, or trust departmentthereofof such 2 9 bank, savings and loan association, or credit union, or in a 2 10 trust company authorized to conduct business in this state, 2 11 within fifteen days after the close of the month of receipt of 2 12 the funds and shall be held as provided in paragraph "g" for 2 13 the designated beneficiary until released pursuant to section 2 14 523A.1. 2 15 c. The seller under an agreement referred to in section 2 16 523A.1 shall file with the commissioner not later than March 1 2 17 of each year a report including the following information: 2 18 (1) The name and address of the seller and the name and 2 19 address of the establishment that will provide the funeral 2 20 services or funeral merchandise. 2 21 (2)The name of the purchaser, beneficiary, and the amount2 22of each agreement under section 523A.1 made in the preceding2 23year and the date on which it was made.The balance of each 2 24 trust account as of the end of the preceding calendar year, 2 25 identified by the name of the purchaser or the beneficiary, 2 26 and a report of any amounts withdrawn from trust and the 2 27 reason for each withdrawal. 2 28 (3)The total value of agreements subject to section2 29523A.1 entered into, the total amount paid pursuant to those2 30agreements, and the total amount deposited in trust as2 31required under section 523A.1, during the preceding year.A 2 32 description of insurance funding outstanding at the end of the 2 33 preceding calendar year, identified by the name of the 2 34 purchaser or the beneficiary, and a report of any insurance 2 35 payments received by the seller. 3 1(4) The amount of any payments received pursuant to3 2agreements reported in previous years in accordance with3 3subparagraphs (2) and (3) and the amount of those payments3 4deposited in trust for each purchaser.3 5(5) The change in status of any trust account, including3 6total amount of interest or income withdrawn from each trust3 7account in the preceding year, and for each purchaser, any3 8other amounts withdrawn from trust and the reason for each3 9withdrawal. However, regular increments of interest or income3 10need not be reported on a yearly basis.3 11(6) The name and address of the financial institution in3 12which trust funds were deposited, and the name and address of3 13each insurance company which funds agreements under section3 14523A.1.3 15(7) The name and address of each purchaser of funeral3 16merchandise delivered in lieu of trusting pursuant to section3 17523A.1, and a description of that merchandise for each3 18purchaser.3 19(8)(4)TheA complete inventory of funeral merchandise 3 20and its location in the seller's possession that has been3 21 delivered in lieu of trusting pursuant to section 523A.1.3 22(9) Other information reasonably required by the com-3 23missioner for purposes of administration of this chapter.3 24The information required by subparagraphs (7) and (8) shall3 25include, including the location of the merchandise, serial 3 26 numbers or warehouse receipt numbers, identified by the name 3 27 of the purchaser or the beneficiary, and a verified statement 3 28 of a certified public accountant that the certified public 3 29 accountant has conducted a physical inventory of the funeral 3 30 merchandisespecified in subparagraph (8)and that each item 3 31 of that merchandise is in the seller's possession at the 3 32 specified location. The statement shall be on a form 3 33 prescribed by the commissioner. 3 34 The report shall be accompanied by a filing fee determined 3 35 by the commissioner which shall be sufficient to defray the 4 1 costs of administering this chapter. 4 2 Sec. 4. Section 523A.2, subsection 7, Code 1995, is 4 3 amended to read as follows: 4 4 7. This chapter does not prohibit the funding of an 4 5 agreementotherwise subject to section 523A.1by insurance 4 6 proceeds derived from a policy issued by an insurance company 4 7 authorized to conduct business in this state. The seller of 4 8 an agreement subject to this chapter which is to be funded by 4 9 insurance proceeds shall obtain all permits required to be 4 10 obtained under this chapter and comply with the reporting 4 11 requirements of this section. 4 12 Sec. 5. Section 523A.8, subsection 1, paragraphs e, h, and 4 13 j, Code 1995, are amended to read as follows: 4 14 e. State clearly whether the agreement is a guaranteed 4 15 price contract or a nonguaranteed price contract. Each 4 16 nonguaranteed price contract shall contain in twelve point 4 17 bold type, an explanation of the consequences in substantially 4 18 the following language: 4 19 THE PRICES OF MERCHANDISE AND SERVICES UNDER THIS AGREEMENT 4 20 ARE SUBJECT TO CHANGE IN THE FUTURE. ANY FUNDS PAID UNDER 4 21 THIS CONTRACT ARE ONLY A DEPOSIT TO BE APPLIED, TOGETHER WITH 4 22 ACCRUED INCOME, TOWARD THE FINAL COSTS OF THE MERCHANDISE OR 4 23 SERVICES CONTRACTED FOR. ADDITIONAL CHARGES MAY BE REQUIRED. 4 24 h. Explain the disposition of theinterest and disclose4 25what fees and expenses may be charged if incurredincome 4 26 generated from investments, include a statement of fees, 4 27 expenses, and taxes which may be deducted, and include a 4 28 statement of the buyer's responsibility for income taxes owed 4 29 on the income, if applicable. 4 30 j.State the name and address of the commissioner.4 31 Include an explanation of regulatory oversight by the 4 32 insurance division in twelve point bold type, in substantially 4 33 the following language: 4 34 THIS CONTRACT MUST BE REPORTED TO THE IOWA INSURANCE 4 35 DIVISION BY THE FIRST DAY OF MARCH OF THE FOLLOWING YEAR. YOU 5 1 MAY CALL THE INSURANCE DIVISION AT (INSERT TELEPHONE NUMBER) 5 2 TO CONFIRM THAT YOUR CONTRACT HAS BEEN REPORTED. WRITTEN 5 3 INQUIRIES OR COMPLAINTS SHOULD BE MAILED TO THE FOLLOWING 5 4 ADDRESS: IOWA SECURITIES BUREAU, (INSERT ADDRESS). 5 5 Sec. 6. Section 523A.8, Code 1995, is amended by adding 5 6 the following new subsection: 5 7 NEW SUBSECTION. 1A. The commissioner may adopt rules 5 8 establishing disclosure and format requirements to promote 5 9 consumers' understanding of the merchandise and services 5 10 purchased and the available funding mechanisms under an 5 11 agreement pursuant to this chapter. 5 12 Sec. 7. Section 523A.8, Code 1995, is amended by adding 5 13 the following new subsection: 5 14 NEW SUBSECTION. 3. The seller shall disclose at the time 5 15 an application is made by an individual and prior to accepting 5 16 the applicant's initial premium or deposit for a preneed 5 17 funeral contract or prearrangement subject to section 523A.1 5 18 which is funded by a life insurance policy, the following 5 19 information: 5 20 a. That a life insurance policy is involved or being used 5 21 to fund an agreement. 5 22 b. The nature of the relationship among the soliciting 5 23 agent or agents, the provider of the funeral or cemetery 5 24 merchandise or services, the administrator, and any other 5 25 person. 5 26 c. The relationship of the life insurance policy to the 5 27 funding of the prearrangement and the nature and existence of 5 28 any guarantees relating to the prearrangement. 5 29 d. The impact on the prearrangement of the following: 5 30 (1) Changes in the life insurance policy including, but 5 31 not limited to, changes in the assignment, beneficiary 5 32 designation, or use of proceeds. 5 33 (2) Any penalties to be incurred by the policyholder as a 5 34 result of the failure to make premium payments. 5 35 (3) Penalties to be incurred or cash to be received as a 6 1 result of the cancellation or surrender of the life insurance 6 2 policy. 6 3 e. A list of merchandise and services which are applied or 6 4 contracted for in the prearrangement and all relevant 6 5 information concerning the price of the funeral services, 6 6 including an indication that the purchase price is either 6 7 guaranteed at the time of purchase or to be determined at the 6 8 time of need. 6 9 f. All relevant information concerning what occurs and 6 10 whether any entitlements or obligations arise if there is a 6 11 difference between the proceeds of the life insurance policy 6 12 and the amount actually needed to fund the agreement. 6 13 g. Any penalties or restrictions, including but not 6 14 limited to, geographic restrictions or the inability of the 6 15 provider to perform, on the delivery of merchandise, services, 6 16 or the prearrangement guarantee. 6 17 h. That a sales commission or other form of compensation 6 18 is being paid and, if so, the identity of the individuals or 6 19 entities to whom it is paid. 6 20 Sec. 8. Section 523A.20, Code 1995, is amended to read as 6 21 follows: 6 22 523A.20 INSURANCE DIVISION'S REGULATORY FUND. 6 23 The insurance division may authorize the creation of a 6 24 special revenue fund in the state treasury, to be known as the 6 25 insurance division regulatory fund.Commencing July 1, 1990,6 26and annually thereafter, theThe commissioner shall allocate 6 27 annually from the fees paid pursuant to section 523A.2,one6 28dollartwo dollars for each agreement reported on an 6 29 establishment permit holder's annual report for deposit to the 6 30 regulatory fund. The remainder of the fees collected pursuant 6 31 to section 523A.2 shall be deposited into the general fund of 6 32 the state.However, if the balance of the regulatory fund on6 33that July 1 exceeds two hundred thousand dollars, the6 34allocation to the regulatory fund shall not be made and the6 35total sum of the fees paid pursuant to section 523A.2 shall be7 1deposited in the general fund of the state.In addition, on 7 2 May 1 of19941996 and19951997, the commissioner, to the 7 3 extent necessary to fund consumer education, audits, 7 4 investigations, payments under contract with licensed 7 5 establishments to provide funeral merchandise or services in 7 6 the event of statutory noncompliance by the initial seller, 7 7 liquidations, and receiverships, shall assess establishment 7 8 permit holdersfivetwo dollars for each agreement reported on 7 9 the establishment permit holder's annual report of sales 7 10 executed during the preceding year, which shall be deposited 7 11 in the insurance division regulatory fund. The moneys in the 7 12 regulatory fund shall be retained in the fund. The moneys are 7 13 appropriated and, subject to authorization by the 7 14 commissioner, may be used to pay auditors, audit expenses, 7 15 investigative expenses, and the expenses of receiverships 7 16 established pursuant to section 523A.19. An annual assessment 7 17 shall not be imposed if the current balance of the fund 7 18 exceeds two hundred thousand dollars. 7 19 Sec. 9. NEW SECTION. 523A.21 LICENSE REVOCATION &endash; 7 20 RECOMMENDATION BY COMMISSIONER TO BOARD OF MORTUARY SCIENCE 7 21 EXAMINERS. 7 22 Upon a determination by the commissioner that grounds exist 7 23 for an administrative license revocation or suspension action 7 24 by the board of mortuary science examiners under chapter 156, 7 25 the commissioner may forward to the board the grounds for the 7 26 determination, including all evidence in the possession of the 7 27 commissioner, so that the board may proceed with the matter as 7 28 deemed appropriate. 7 29 Sec. 10. NEW SECTION. 523A.22 LIQUIDATION. 7 30 1. GROUNDS FOR LIQUIDATION. Upon receipt of a written 7 31 request from the board of mortuary science examiners, the 7 32 commissioner may petition the district court for an order 7 33 directing the commissioner to liquidate a funeral 7 34 establishment on any of the following grounds: 7 35 a. The funeral establishment did not deposit funds 8 1 pursuant to section 523A.1 or withdrew funds in a manner 8 2 inconsistent with this chapter and is insolvent. 8 3 b. The funeral establishment did not deposit funds 8 4 pursuant to section 523A.1 or withdrew funds in a manner 8 5 inconsistent with this chapter and the condition of the 8 6 funeral establishment is such that the further transaction of 8 7 business would be hazardous, financially or otherwise, to its 8 8 preneed funeral customers or the public. 8 9 2. LIQUIDATION ORDER. 8 10 a. An order to liquidate the business of a funeral 8 11 establishment shall appoint the commissioner as liquidator and 8 12 shall direct the liquidator to immediately take possession of 8 13 the assets of the funeral establishment and to administer them 8 14 under the general supervision of the court. The liquidator is 8 15 vested with the title to the property, contracts, and rights 8 16 of action and the books and records of the funeral 8 17 establishment ordered liquidated, wherever located, as of the 8 18 entry of the final order of liquidation. The filing or 8 19 recording of the order with the clerk of court and the 8 20 recorder of deeds of the county in which its principal office 8 21 or place of business is located, or, in the case of real 8 22 estate with the recorder of deeds of the county where the 8 23 property is located, is notice as a deed, bill of sale, or 8 24 other evidence of title duly filed or recorded with the 8 25 recorder of deeds. 8 26 b. Upon issuance of an order, the rights and liabilities 8 27 of a funeral establishment and of the funeral establishment's 8 28 creditors, preneed and at-need funeral customers, owners, and 8 29 other persons interested in the funeral establishment's estate 8 30 shall become fixed as of the date of the entry of the order of 8 31 liquidation, except as provided in subsection 14. 8 32 c. At the time of petitioning for an order of liquidation, 8 33 or at any time after the time of petitioning, the 8 34 commissioner, after making appropriate findings of a funeral 8 35 establishment's insolvency, may petition the court for a 9 1 declaration of insolvency. After providing notice and hearing 9 2 as it deems proper, the court may make the declaration. 9 3 d. An order issued under this section shall require 9 4 accounting to the court by the liquidator. Accountings, at a 9 5 minimum, must include all funds received or disbursed by the 9 6 liquidator during the current period. An accounting shall be 9 7 filed within one year of the liquidation order and at such 9 8 other times as the court may require. 9 9 e. Within five days after the initiation of an appeal of 9 10 an order of liquidation, which order has not been stayed, the 9 11 commissioner shall present for the court's approval a plan for 9 12 the continued performance of the funeral establishment's 9 13 obligations during the pendency of an appeal. The plan shall 9 14 provide for the continued performance of preneed and at-need 9 15 funeral contracts in the normal course of events, 9 16 notwithstanding the grounds alleged in support of the order of 9 17 liquidation including the ground of insolvency. If the 9 18 defendant funeral establishment's financial condition, in the 9 19 judgment of the commissioner, will not support the full 9 20 performance of all obligations during the appeal pendency 9 21 period, the plan may prefer the claims of certain at-need and 9 22 preneed funeral customers and claimants over creditors and 9 23 interested parties as well as other at-need and preneed 9 24 funeral customers and claimants, as the commissioner finds to 9 25 be fair and equitable considering the relative circumstances 9 26 of such at-need and preneed funeral customers and claimants. 9 27 The court shall examine the plan submitted by the commissioner 9 28 and if it finds the plan to be in the best interests of the 9 29 parties, the court shall approve the plan. An action shall 9 30 not lie against the commissioner or any of the commissioner's 9 31 deputies, agents, clerks, assistants, or attorneys by any 9 32 party based on preference in an appeal pendency plan approved 9 33 by the court. 9 34 3. POWERS OF LIQUIDATOR. 9 35 a. The liquidator may do any of the following: 10 1 (1) Appoint a special deputy to act for the liquidator 10 2 under this chapter, and determine the special deputy's 10 3 reasonable compensation. The special deputy shall have all 10 4 the powers of the liquidator granted by this section. The 10 5 special deputy shall serve at the pleasure of the liquidator. 10 6 (2) Hire employees and agents, legal counsel, accountants, 10 7 appraisers, consultants, and other personnel as the 10 8 commissioner may deem necessary to assist in the liquidation. 10 9 (3) With the approval of the court fix reasonable 10 10 compensation of employees and agents, legal counsel, 10 11 accountants, appraisers, and consultants. 10 12 (4) Pay reasonable compensation to persons appointed and 10 13 defray from the funds or assets of the funeral establishment 10 14 all expenses of taking possession of, conserving, conducting, 10 15 liquidating, disposing of, or otherwise dealing with the 10 16 business and property of the funeral establishment. If the 10 17 property of the funeral establishment does not contain 10 18 sufficient cash or liquid assets to defray the costs incurred, 10 19 the commissioner may advance the costs so incurred out of the 10 20 insurance division regulatory fund. Amounts so advanced for 10 21 expenses of administration shall be repaid to the insurance 10 22 division regulatory fund for the use of the division out of 10 23 the first available moneys of the funeral establishment. 10 24 (5) Hold hearings, subpoena witnesses, and compel their 10 25 attendance, administer oaths, examine a person under oath, and 10 26 compel a person to subscribe to the person's testimony after 10 27 it has been correctly reduced to writing, and in connection to 10 28 the proceedings require the production of books, papers, 10 29 records, or other documents which the liquidator deems 10 30 relevant to the inquiry. 10 31 (6) Collect debts and moneys due and claims belonging to 10 32 the funeral establishment, wherever located. Pursuant to this 10 33 subparagraph, the liquidator may do any of the following: 10 34 (a) Institute timely action in other jurisdictions to 10 35 forestall garnishment and attachment proceedings against 11 1 debts. 11 2 (b) Perform acts as are necessary or expedient to collect, 11 3 conserve, or protect its assets or property, including the 11 4 power to sell, compound, compromise, or assign debts for 11 5 purposes of collection upon terms and conditions as the 11 6 liquidator deems best. 11 7 (c) Pursue any creditor's remedies available to enforce 11 8 claims. 11 9 (7) Conduct public and private sales of the property of 11 10 the funeral establishment. 11 11 (8) Use assets of the funeral establishment under a 11 12 liquidation order to transfer obligations of preneed funeral 11 13 contracts to a solvent funeral establishment, if the transfer 11 14 can be accomplished without prejudice to applicable priorities 11 15 under subsection 18. 11 16 (9) Acquire, hypothecate, encumber, lease, improve, sell, 11 17 transfer, abandon, or otherwise dispose of or deal with 11 18 property of the funeral establishment at its market value or 11 19 upon terms and conditions as are fair and reasonable. The 11 20 liquidator shall also have power to execute, acknowledge, and 11 21 deliver deeds, assignments, releases, and other instruments 11 22 necessary to effectuate a sale of property or other 11 23 transaction in connection with the liquidation. 11 24 (10) Borrow money on the security of the funeral 11 25 establishment's assets or without security and execute and 11 26 deliver documents necessary to that transaction for the 11 27 purpose of facilitating the liquidation. Money borrowed 11 28 pursuant to this subparagraph shall be repaid as an 11 29 administrative expense and shall have priority over any other 11 30 class 1 claims under the priority of distribution established 11 31 in subsection 18. 11 32 (11) Enter into contracts as necessary to carry out the 11 33 order to liquidate and affirm or disavow contracts to which 11 34 the funeral establishment is a party. 11 35 (12) Continue to prosecute and to institute in the name of 12 1 the funeral establishment or in the liquidator's own name any 12 2 and all suits and other legal proceedings, in this state or 12 3 elsewhere, and to abandon the prosecution of claims the 12 4 liquidator deems unprofitable to pursue further. 12 5 (13) Prosecute an action on behalf of the creditors, at- 12 6 need funeral customers, preneed funeral customers, or owners 12 7 against an officer of the funeral establishment or any other 12 8 person. 12 9 (14) Remove records and property of the funeral 12 10 establishment to the offices of the commissioner or to other 12 11 places as may be convenient for the purposes of efficient and 12 12 orderly execution of the liquidation. 12 13 (15) Deposit in one or more banks in this state sums as 12 14 are required for meeting current administration expenses and 12 15 distributions. 12 16 (16) Unless the court orders otherwise, invest funds not 12 17 currently needed. 12 18 (17) File necessary documents for recording in the office 12 19 of a recorder of deeds or record office in this state or 12 20 elsewhere where property of the funeral establishment is 12 21 located. 12 22 (18) Assert defenses available to the funeral 12 23 establishment as against third persons including statutes of 12 24 limitations, statutes of fraud, and the defense of usury. A 12 25 waiver of a defense by the funeral establishment after a 12 26 petition in liquidation has been filed shall not bind the 12 27 liquidator. 12 28 (19) Exercise and enforce the rights, remedies, and powers 12 29 of a creditor, at-need funeral customer, preneed funeral 12 30 customer, or owner, including the power to avoid transfer or 12 31 lien that may be given by the general law and that is not 12 32 included within subsections 7 through 9. 12 33 (20) Intervene in a proceeding wherever instituted that 12 34 might lead to the appointment of a receiver or trustee, and 12 35 act as the receiver or trustee whenever the appointment is 13 1 offered. 13 2 (21) Exercise powers now held or later conferred upon 13 3 receivers by the laws of this state which are not inconsistent 13 4 with this chapter. 13 5 b. This subsection does not limit the liquidator or 13 6 exclude the liquidator from exercising a power not listed in 13 7 paragraph "a" that may be necessary or appropriate to 13 8 accomplish the purposes of this chapter. 13 9 4. NOTICE TO CREDITORS AND OTHERS. 13 10 a. Unless the court otherwise directs, the liquidator 13 11 shall give notice of the liquidation order as soon as possible 13 12 by doing all of the following: 13 13 (1) By first class mail to all persons known or reasonably 13 14 expected to have claims against the funeral establishment, 13 15 including at-need and preneed funeral customers, by mailing a 13 16 notice to their last known address as indicated by the records 13 17 of the funeral establishment. 13 18 (2) By publication in a newspaper of general circulation 13 19 in the county in which the funeral establishment has its 13 20 principal place of business and in other locations as the 13 21 liquidator deems appropriate. 13 22 b. Notice to potential claimants under paragraph "a" shall 13 23 require claimants to file with the liquidator their claims 13 24 together with proper proofs of the claim under subsection 13 13 25 on or before a date the liquidator shall specify in the 13 26 notice. Claimants shall keep the liquidator informed of their 13 27 changes of address, if any. 13 28 c. If notice is given pursuant to this section, the 13 29 distribution of assets of the funeral establishment under this 13 30 chapter shall be conclusive with respect to claimants, whether 13 31 or not a claimant actually received notice. 13 32 5. ACTIONS BY AND AGAINST LIQUIDATOR. 13 33 a. After the issuance of an order appointing a liquidator 13 34 of a funeral establishment, an action at law or equity shall 13 35 not be brought against the funeral establishment in this state 14 1 or elsewhere, and existing actions shall not be maintained or 14 2 further presented after issuance of the order. Whenever in 14 3 the liquidator's judgment, protection of the estate of the 14 4 funeral establishment necessitates intervention in an action 14 5 against the funeral establishment that is pending outside this 14 6 state, the liquidator may intervene in the action. The 14 7 liquidator may defend, at the expense of the estate of the 14 8 funeral establishment, an action in which the liquidator 14 9 intervenes under this section. 14 10 b. Within two years or such additional time as applicable 14 11 law may permit, the liquidator, after the issuance of an order 14 12 for liquidation, may institute an action or proceeding on 14 13 behalf of the estate of the funeral establishment upon any 14 14 cause of action against which the period of limitation fixed 14 15 by applicable law has not expired at the time of the filing of 14 16 the petition upon which the order is entered. If a period of 14 17 limitation is fixed by agreement for instituting a suit or 14 18 proceeding upon a claim, or for filing a claim, proof of 14 19 claim, proof of loss, demand, notice, or the like, or if in a 14 20 proceeding, judicial or otherwise, a period of limitation is 14 21 fixed in the proceeding or pursuant to applicable law for 14 22 taking an action, filing a claim or pleading, or doing an act, 14 23 and if the period had not expired at the date of the filing of 14 24 the petition, the liquidator may, for the benefit of the 14 25 estate, take any action or do any act, required of or 14 26 permitted to the funeral establishment, within a period of one 14 27 hundred eighty days subsequent to the entry of an order for 14 28 liquidation, or within a further period as is shown to the 14 29 satisfaction of the court not to be unfairly prejudicial to 14 30 the other party. 14 31 c. A statute of limitation or defense of laches shall not 14 32 run with respect to an action against a funeral establishment 14 33 between the filing of a petition for liquidation against the 14 34 funeral establishment and the denial of the petition. An 14 35 action against the funeral establishment that might have been 15 1 commenced when the petition was filed may be commenced for at 15 2 least sixty days after the petition is denied. 15 3 6. COLLECTION AND LIST OF ASSETS. 15 4 a. As soon as practicable after the liquidation order but 15 5 not later than one hundred twenty days after such order, the 15 6 liquidator shall prepare in duplicate a list of the funeral 15 7 establishment's assets. The list shall be amended or 15 8 supplemented as the liquidator may determine. One copy shall 15 9 be filed in the office of the clerk of court and one copy 15 10 shall be retained for the liquidator's files. Amendments and 15 11 supplements shall be similarly filed. 15 12 b. The liquidator shall reduce the assets to a degree of 15 13 liquidity that is consistent with the effective execution of 15 14 the liquidation. 15 15 c. A submission to the court for distribution of assets in 15 16 accordance with subsection 11 fulfills the requirements of 15 17 paragraph "a". 15 18 7. FRAUDULENT TRANSFERS PRIOR TO PETITION. 15 19 a. A transfer made and an obligation incurred by a funeral 15 20 establishment within one year prior to the filing of a 15 21 successful petition for liquidation under this chapter is 15 22 fraudulent as to then existing and future creditors if made or 15 23 incurred without fair consideration, or with actual intent to 15 24 hinder, delay, or defraud either existing or future creditors. 15 25 A fraudulent transfer made or an obligation incurred by a 15 26 funeral establishment ordered to be liquidated under this 15 27 chapter may be avoided by the receiver, except as to a person 15 28 who in good faith is a purchaser, lienor, or obligee for a 15 29 present fair equivalent value. A purchaser, lienor, or 15 30 obligee, who in good faith has given a consideration less than 15 31 fair for such transfer, lien, or obligation, may retain the 15 32 property, lien, or obligation as security for repayment. The 15 33 court may, on due notice, order any such transfer or 15 34 obligation to be preserved for the benefit of the estate, and 15 35 in that event, the receiver shall succeed to and may enforce 16 1 the rights of the purchaser, lienor, or obligee. 16 2 b. (1) A transfer of property other than real property is 16 3 made when it becomes perfected so that a subsequent lien 16 4 obtainable by legal or equitable proceedings on a simple 16 5 contract could not become superior to the rights of the 16 6 transferee under subsection 9, paragraph "c". 16 7 (2) A transfer of real property is made when it becomes 16 8 perfected so that a subsequent bona fide purchaser from the 16 9 funeral establishment could not obtain rights superior to the 16 10 rights of the transferee. 16 11 (3) A transfer which creates an equitable lien is not 16 12 perfected if there are available means by which a legal lien 16 13 could be created. 16 14 (4) A transfer not perfected prior to the filing of a 16 15 petition for liquidation is deemed to be made immediately 16 16 before the filing of the successful petition. 16 17 (5) This subsection applies whether or not there are or 16 18 were creditors who might have obtained a lien or persons who 16 19 might have become bona fide purchasers. 16 20 8. FRAUDULENT TRANSFER AFTER PETITION. 16 21 a. After a petition for liquidation has been filed a 16 22 transfer of real property of the funeral establishment made to 16 23 a person acting in good faith is valid against the liquidator 16 24 if made for a present fair equivalent value. If the transfer 16 25 was not made for a present fair equivalent value, then the 16 26 transfer is valid to the extent of the present consideration 16 27 actually paid for which amount the transferee shall have a 16 28 lien on the property transferred. The commencement of a 16 29 proceeding in liquidation is constructive notice upon the 16 30 recording of a copy of the petition for or order of 16 31 liquidation with the recorder of deeds in the county where any 16 32 real property in question is located. The exercise by a court 16 33 of the United States or a state or jurisdiction to authorize a 16 34 judicial sale of real property of the funeral establishment 16 35 within a county in a state shall not be impaired by the 17 1 pendency of a proceeding unless the copy is recorded in the 17 2 county prior to the consummation of the judicial sale. 17 3 b. After a petition for liquidation has been filed and 17 4 before either the receiver takes possession of the property of 17 5 the funeral establishment or an order of liquidation is 17 6 granted: 17 7 (1) A transfer of the property, other than real property, 17 8 of the funeral establishment made to a person acting in good 17 9 faith is valid against the receiver if made for a present fair 17 10 equivalent value. If the transfer was not made for a present 17 11 fair equivalent value, then the transfer is valid to the 17 12 extent of the present consideration actually paid for which 17 13 amount the transferee shall have a lien on the property 17 14 transferred. 17 15 (2) If acting in good faith, a person indebted to the 17 16 funeral establishment or holding property of the funeral 17 17 establishment may pay the debt or deliver the property, or any 17 18 part of the property, to the funeral establishment or upon the 17 19 funeral establishment's order as if the petition were not 17 20 pending. 17 21 (3) A person having actual knowledge of the pending 17 22 liquidation is not acting in good faith. 17 23 (4) A person asserting the validity of a transfer under 17 24 this subsection has the burden of proof. Except as provided 17 25 in this subsection, a transfer by or on behalf of the funeral 17 26 establishment after the date of the petition for liquidation 17 27 by any person other than the liquidator is not valid against 17 28 the liquidator. 17 29 c. A person receiving any property from the funeral 17 30 establishment or any benefit of the property of the funeral 17 31 establishment which is a fraudulent transfer under paragraph 17 32 "a" is personally liable for the property or benefit and shall 17 33 account to the liquidator. 17 34 d. This chapter does not impair the negotiability of 17 35 currency or negotiable instruments. 18 1 9. VOIDABLE PREFERENCES AND LIENS. 18 2 a. (1) A preference is a transfer of the property of a 18 3 funeral establishment to or for the benefit of a creditor for 18 4 an antecedent debt made or suffered by the funeral 18 5 establishment within one year before the filing of a 18 6 successful petition for liquidation under this chapter, the 18 7 effect of which transfer may be to enable the creditor to 18 8 obtain a greater percentage of this debt than another creditor 18 9 of the same class would receive. If a liquidation order is 18 10 entered while the funeral establishment is already subject to 18 11 a receivership, then the transfers are preferences if made or 18 12 suffered within one year before the filing of the successful 18 13 petition for the receivership, or within two years before the 18 14 filing of the successful petition for liquidation, whichever 18 15 time is shorter. 18 16 (2) A preference may be avoided by the liquidator if any 18 17 of the following exist: 18 18 (a) The funeral establishment was insolvent at the time of 18 19 the transfer. 18 20 (b) The transfer was made within four months before the 18 21 filing of the petition. 18 22 (c) At the time the transfer was made, the creditor 18 23 receiving it or to be benefited by the transfer or the 18 24 creditor's agent acting with reference to the transfer had 18 25 reasonable cause to believe that the funeral establishment was 18 26 insolvent or was about to become insolvent. 18 27 (d) The creditor receiving the transfer was an officer, or 18 28 an employee, attorney, or other person who was in fact in a 18 29 position of comparable influence in the funeral establishment 18 30 to an officer whether or not the person held the position of 18 31 an officer, owner, or other person, firm, corporation, 18 32 association, or aggregation of persons with whom the funeral 18 33 establishment did not deal at arm's length. 18 34 (3) Where the preference is voidable, the liquidator may 18 35 recover the property. If the property has been converted, the 19 1 liquidator may recover its value from a person who has 19 2 received or converted the property. However, if a bona fide 19 3 purchaser or lienor has given less than fair equivalent value, 19 4 the purchaser or lienor shall have a lien upon the property to 19 5 the extent of the consideration actually given. Where a 19 6 preference by way of lien or security interest is voidable, 19 7 the court may on due notice order the lien or security 19 8 interest to be preserved for the benefit of the estate, in 19 9 which event the lien or title shall pass to the liquidator. 19 10 b. (1) A transfer of property other than real property is 19 11 made when it becomes perfected so that a subsequent lien 19 12 obtainable by legal or equitable proceedings on a simple 19 13 contract could not become superior to the rights of the 19 14 transferee. 19 15 (2) A transfer of real property is made when it becomes 19 16 perfected so that a subsequent bona fide purchaser from the 19 17 funeral establishment could not obtain rights superior to the 19 18 rights of the transferee. 19 19 (3) A transfer which creates an equitable lien is not 19 20 perfected if there are available means by which a legal lien 19 21 could be created. 19 22 (4) A transfer not perfected prior to the filing of a 19 23 petition for liquidation is deemed to be made immediately 19 24 before the filing of the successful petition. 19 25 (5) This subsection applies whether or not there are or 19 26 were creditors who might have obtained liens or persons who 19 27 might have become bona fide purchasers. 19 28 c. (1) A lien obtainable by legal or equitable 19 29 proceedings upon a simple contract is one arising in the 19 30 ordinary course of the proceedings upon the entry or docketing 19 31 of a judgment or decree, or upon attachment, garnishment, 19 32 execution, or like process, whether before, upon, or after 19 33 judgment or decree and whether before or upon levy. It does 19 34 not include liens which under applicable law are given a 19 35 special priority over other liens which are prior in time. 20 1 (2) A lien obtainable by legal or equitable proceedings 20 2 could become superior to the rights of a transferee, or a 20 3 purchaser could obtain rights superior to the rights of a 20 4 transferee within the meaning of paragraph "b", if such 20 5 consequences would follow only from the lien or purchase 20 6 itself, or from the lien or purchase followed by a step wholly 20 7 within the control of the respective lienholder or purchaser, 20 8 with or without the aid of ministerial action by public 20 9 officials. However, a lien could not become superior and a 20 10 purchase could not create superior rights for the purpose of 20 11 paragraph "b" through an act subsequent to the obtaining of a 20 12 lien or subsequent to a purchase which requires the agreement 20 13 or concurrence of any third party or which requires further 20 14 judicial action or ruling. 20 15 d. A transfer of property for or on account of a new and 20 16 contemporaneous consideration, which is under paragraph "b" 20 17 made or suffered after the transfer because of delay in 20 18 perfecting it, does not become a transfer for or on account of 20 19 an antecedent debt if any acts required by the applicable law 20 20 to be performed in order to perfect the transfer as against 20 21 liens or a bona fide purchaser's rights are performed within 20 22 twenty-one days or any period expressly allowed by the law, 20 23 whichever is less. A transfer to secure a future loan, if a 20 24 loan is actually made, or a transfer which becomes security 20 25 for a future loan, shall have the same effect as a transfer 20 26 for or on account of a new and contemporaneous consideration. 20 27 e. If a lien voidable under paragraph "a", subparagraph 20 28 (2), has been dissolved by the furnishing of a bond or other 20 29 obligation, the surety on which has been indemnified directly 20 30 or indirectly by the transfer or the creation of a lien upon 20 31 property of a funeral establishment before the filing of a 20 32 petition under this chapter which results in a liquidation 20 33 order, the indemnifying transfer or lien is also voidable. 20 34 f. The property affected by a lien voidable under 20 35 paragraphs "a" and "e" is discharged from the lien. The 21 1 property and any of the indemnifying property transferred to 21 2 or for the benefit of a surety shall pass to the liquidator. 21 3 However, the court may on due notice order a lien to be 21 4 preserved for the benefit of the estate and the court may 21 5 direct that the conveyance be executed to evidence the title 21 6 of the liquidator. 21 7 g. The court shall have summary jurisdiction of a 21 8 proceeding by the liquidator to hear and determine the rights 21 9 of the parties under this section. Reasonable notice of 21 10 hearing in the proceeding shall be given to all parties in 21 11 interest, including the obligee of a releasing bond or other 21 12 like obligation. Where an order is entered for the recovery 21 13 of indemnifying property in kind or for the avoidance of an 21 14 indemnifying lien, upon application of any party in interest, 21 15 the court shall in the same proceeding ascertain the value of 21 16 the property or lien. If the value is less than the amount 21 17 for which the property is indemnified or less than the amount 21 18 of the lien, the transferee or lienholder may elect to retain 21 19 the property or lien upon payment of its value, as ascertained 21 20 by the court, to the liquidator within the time as fixed by 21 21 the court. 21 22 h. The liability of a surety under a releasing bond or 21 23 other like obligation is discharged to the extent of the value 21 24 of the indemnifying property recovered or the indemnifying 21 25 lien nullified and avoided by the liquidator. Where the 21 26 property is retained under paragraph "g", the liability of the 21 27 surety is discharged to the extent of the amount paid to the 21 28 liquidator. 21 29 i. If a creditor has been preferred for property which 21 30 becomes a part of the funeral establishment's estate, and 21 31 afterward in good faith gives the funeral establishment 21 32 further credit without security of any kind, the amount of the 21 33 new credit remaining unpaid at the time of the petition may be 21 34 set off against the preference which would otherwise be 21 35 recoverable from the creditor. 22 1 j. If within four months before the filing of a successful 22 2 petition for liquidation under this chapter, or at any time in 22 3 contemplation of a proceeding to liquidate, a funeral 22 4 establishment, directly or indirectly, pays money or transfers 22 5 property to an attorney for services rendered or to be 22 6 rendered, the transaction may be examined by the court on its 22 7 own motion or shall be examined by the court on petition of 22 8 the liquidator. The payment or transfer shall be held valid 22 9 only to the extent of a reasonable amount to be determined by 22 10 the court. The excess may be recovered by the liquidator for 22 11 the benefit of the estate. However, where the attorney is in 22 12 a position of influence in the funeral establishment or an 22 13 affiliate, payment of any money or the transfer of any 22 14 property to the attorney for services rendered or to be 22 15 rendered shall be governed by the provision of paragraph "a", 22 16 subparagraph (2), subparagraph subdivision (d). 22 17 k. (1) An officer, manager, employee, shareholder, 22 18 subscriber, attorney, or any other person acting on behalf of 22 19 the funeral establishment who knowingly participates in giving 22 20 any preference when the person has reasonable cause to believe 22 21 the funeral establishment is or is about to become insolvent 22 22 at the time of the preference is personally liable to the 22 23 liquidator for the amount of the preference. There is an 22 24 inference that reasonable cause exists if the transfer was 22 25 made within four months before the date of filing of this 22 26 successful petition for liquidation. 22 27 (2) A person receiving property from the funeral 22 28 establishment or the benefit of the property of the funeral 22 29 establishment as a preference voidable under paragraph "a" is 22 30 personally liable for the property and shall account to the 22 31 liquidator. 22 32 (3) This subsection shall not prejudice any other claim by 22 33 the liquidator against any person. 22 34 10. CLAIMS OF HOLDER OF VOID OR VOIDABLE RIGHTS. 22 35 a. A claim of a creditor who has received or acquired a 23 1 preference, lien, conveyance, transfer, assignment, or 23 2 encumbrance, voidable under this chapter, shall not be allowed 23 3 unless the creditor surrenders the preference, lien, 23 4 conveyance, transfer, assignment, or encumbrance. If the 23 5 avoidance is effected by a proceeding in which a final 23 6 judgment has been entered, the claim shall not be allowed 23 7 unless the money is paid or the property is delivered to the 23 8 liquidator within thirty days from the date of the entering of 23 9 the final judgment. However, the court having jurisdiction 23 10 over the liquidation may allow further time if there is an 23 11 appeal or other continuation of the proceeding. 23 12 b. A claim allowable under paragraph "a" by reason of a 23 13 voluntary or involuntary avoidance, preference, lien, 23 14 conveyance, transfer, assignment, or encumbrance may be filed 23 15 as an excused late filing under subsection 12, if filed within 23 16 thirty days from the date of the avoidance or within the 23 17 further time allowed by the court under paragraph "a". 23 18 11. LIQUIDATOR'S PROPOSAL TO DISTRIBUTE ASSETS. 23 19 a. From time to time as assets become available, the 23 20 liquidator shall make application to the court for approval of 23 21 a proposal to disburse assets out of marshaled assets. 23 22 b. The proposal shall at least include provisions for all 23 23 of the following: 23 24 (1) Reserving amounts for the payment of all the 23 25 following: 23 26 (a) Expenses of administration. 23 27 (b) To the extent of the value of the security held, the 23 28 payment of claims of secured creditors. 23 29 (c) Claims falling within the priorities established in 23 30 subsection 18, paragraphs "a" and "b". 23 31 (2) Disbursement of the assets marshaled to date and 23 32 subsequent disbursement of assets as they become available. 23 33 c. Action on the application may be taken by the court 23 34 provided that the liquidator's proposal complies with 23 35 paragraph "b". 24 1 12. FILING OF CLAIMS. 24 2 a. Proof of all claims shall be filed with the liquidator 24 3 in the form required by subsection 13 on or before the last 24 4 day for filing specified in the notice required under 24 5 subsection 4. 24 6 b. The liquidator may permit a claimant making a late 24 7 filing to share in distributions, whether past or future, as 24 8 if the claimant were not late, to the extent that the payment 24 9 will not prejudice the orderly administration of the 24 10 liquidation under any of the following circumstances: 24 11 (1) The existence of the claim was not known to the 24 12 claimant and that the claimant filed the claim as promptly as 24 13 reasonably possible after learning of it. 24 14 (2) A transfer to a creditor was avoided under subsections 24 15 7 through 9, or was voluntarily surrendered under subsection 24 16 10, and that the filing satisfies the conditions of subsection 24 17 10. 24 18 (3) The valuation under subsection 17 of security held by 24 19 a secured creditor shows a deficiency, which is filed within 24 20 thirty days after the valuation. 24 21 c. The liquidator may consider any claim filed late and 24 22 permit the claimant to receive distributions which are 24 23 subsequently declared on any claims of the same or lower 24 24 priority if the payment does not prejudice the orderly 24 25 administration of the liquidation. The late-filing claimant 24 26 shall receive at each distribution the same percentage of the 24 27 amount allowed on the claim as is then being paid to claimants 24 28 of any lower priority. This shall continue until the claim 24 29 has been paid in full. 24 30 13. PROOF OF CLAIM. 24 31 a. Proof of claim shall consist of a statement signed by 24 32 the claimant that includes all of the following that are 24 33 applicable: 24 34 (1) The particulars of the claim, including the 24 35 consideration given for it. 25 1 (2) The identity and amount of the security on the claim. 25 2 (3) The payments, if any, made on the debt. 25 3 (4) A statement that the sum claimed is justly owing and 25 4 that there is no setoff, counterclaim, or defense to the 25 5 claim. 25 6 (5) Any right of priority of payment or other specific 25 7 right asserted by the claimant. 25 8 (6) A copy of the written instrument which is the 25 9 foundation of the claim. 25 10 (7) The name and address of the claimant and the attorney 25 11 who represents the claimant, if any. 25 12 b. A claim need not be considered or allowed if it does 25 13 not contain all the information identified in paragraph "a" 25 14 which is applicable. The liquidator may require that a 25 15 prescribed form be used and may require that other information 25 16 and documents be included. 25 17 c. At any time the liquidator may request the claimant to 25 18 present information or evidence supplementary to that required 25 19 under paragraph "a", and may take testimony under oath, 25 20 require production of affidavits or depositions, or otherwise 25 21 obtain additional information or evidence. 25 22 d. A judgment or order against a funeral establishment 25 23 entered after the date of filing of a successful petition for 25 24 liquidation, or a judgment or order against the funeral 25 25 establishment entered at any time by default or by collusion 25 26 need not be considered as evidence of liability or of the 25 27 amount of damages. A judgment or order against a funeral 25 28 establishment before the filing of the petition need not be 25 29 considered as evidence of liability or of the amount of 25 30 damages. 25 31 14. SPECIAL CLAIMS. 25 32 a. A claim may be allowed even if contingent, if it is 25 33 filed pursuant to subsection 12. The claim may be allowed and 25 34 the claimant may participate in all distributions declared 25 35 after it is filed to the extent that it does not prejudice the 26 1 orderly administration of the liquidation. 26 2 b. Claims that are due except for the passage of time 26 3 shall be treated as absolute claims are treated. However, the 26 4 claims may be discounted at the legal rate of interest. 26 5 c. Claims made under employment contracts by directors, 26 6 principal officers, or persons in fact performing similar 26 7 functions or having similar powers are limited to payment for 26 8 services rendered prior to the issuance of an order of 26 9 liquidation under subsection 2. 26 10 15. DISPUTED CLAIMS. 26 11 a. If a claim is denied in whole or in part by the 26 12 liquidator, written notice of the determination shall be given 26 13 to the claimant or the claimant's attorney by first class mail 26 14 at the address shown in the proof of claim. Within sixty days 26 15 from the mailing of the notice, the claimant may file 26 16 objections with the liquidator. Unless a filing is made, the 26 17 claimant shall not further object to the determination. 26 18 b. If objections are filed with the liquidator and the 26 19 liquidator does not alter the denial of the claim as a result 26 20 of the objections, the liquidator shall ask the court for a 26 21 hearing as soon as practicable and give notice of the hearing 26 22 by first class mail to the claimant or the claimant's attorney 26 23 and to any other persons directly affected. The notice shall 26 24 be given not less than ten nor more than thirty days before 26 25 the date of the hearing. The matter shall be heard by the 26 26 court or by a court-appointed referee. The referee shall 26 27 submit findings of fact along with a recommendation. 26 28 16. CLAIMS OF OTHER PERSON. If a creditor, whose claim 26 29 against a funeral establishment is secured in whole or in part 26 30 by the undertaking of another person, fails to prove and file 26 31 that claim, then the other person may do so in the creditor's 26 32 name and shall be subrogated to the rights of the creditor, 26 33 whether the claim has been filed by the creditor or by the 26 34 other person in the creditor's name to the extent that the 26 35 other person discharges the undertaking. However, in the 27 1 absence of an agreement with the creditor to the contrary, the 27 2 other person is not entitled to any distribution until the 27 3 amount paid to the creditor on the undertaking plus the 27 4 distributions paid on the claim from the funeral 27 5 establishment's estate to the creditor equal the amount of the 27 6 entire claim of the creditor. An excess received by the 27 7 creditor shall be held by the creditor in trust for the other 27 8 person. 27 9 17. SECURED CREDITOR'S CLAIMS. 27 10 a. The value of security held by a secured creditor shall 27 11 be determined in one of the following ways, as the court may 27 12 direct: 27 13 (1) By converting the security into money according to the 27 14 terms of the agreement pursuant to which the security was 27 15 delivered to the creditors. 27 16 (2) By agreement, arbitration, compromise, or litigation 27 17 between the creditor and the liquidator. 27 18 b. The determination shall be under the supervision and 27 19 control of the court with due regard for the recommendation of 27 20 the liquidator. The amount so determined shall be credited 27 21 upon the secured claim. A deficiency shall be treated as an 27 22 unsecured claim. If the claimant surrenders the security to 27 23 the liquidator, the entire claim shall be allowed as if 27 24 unsecured. 27 25 18. PRIORITY OF DISTRIBUTION. The priority of 27 26 distribution of claims from the funeral establishment's estate 27 27 shall be in accordance with the order in which each class of 27 28 claims is set forth. Claims in each class shall be paid in 27 29 full or adequate funds retained for the payment before the 27 30 members of the next class receive any payment. Subclasses 27 31 shall not be established within a class. The order of 27 32 distribution of claims is as follows: 27 33 a. CLASS 1. The costs and expenses of administration, 27 34 including but not limited to the following: 27 35 (1) The actual and necessary costs of preserving or 28 1 recovering the assets of the funeral establishment. 28 2 (2) Compensation for all authorized services rendered in 28 3 the liquidation. 28 4 (3) Necessary filing fees. 28 5 (4) The fees and mileage payable to witnesses. 28 6 (5) Authorized reasonable attorney's fees and other 28 7 professional services rendered in the liquidation. 28 8 b. CLASS 2. Reasonable compensation to employees for 28 9 services performed to the extent that they do not exceed two 28 10 months of monetary compensation and represent payment for 28 11 services performed within one year before the filing of the 28 12 petition for liquidation. Officers and directors are not 28 13 entitled to the benefit of this priority. The priority is in 28 14 lieu of other similar priority which may be authorized by law 28 15 as to wages or compensation of employees. 28 16 c. CLASS 3. Claims under at-need and preneed funeral 28 17 contracts. 28 18 d. CLASS 4. Claims of general creditors. 28 19 e. CLASS 5. Claims of the federal or any state or local 28 20 government. Claims, including those of a governmental body 28 21 for a penalty or forfeiture, are allowed in this class only to 28 22 the extent of the pecuniary loss sustained from the act, 28 23 transaction, or proceeding out of which the penalty or 28 24 forfeiture arose, with reasonable and actual costs incurred. 28 25 The remainder of such claims shall be postponed to the class 28 26 of claims under paragraph "g". 28 27 f. CLASS 6. Claims filed late or any other claims other 28 28 than claims under paragraph "g". 28 29 g. CLASS 7. The claims of shareholders or other owners. 28 30 19. LIQUIDATOR'S RECOMMENDATIONS TO THE COURT. 28 31 a. The liquidator shall review claims duly filed in the 28 32 liquidation and shall make further investigation as necessary. 28 33 The liquidator may compound, compromise, or in any other 28 34 manner negotiate the amount for which claims will be 28 35 recommended to the court except where the liquidator is 29 1 required by law to accept claims as settled by a person or 29 2 organization. Unresolved disputes shall be determined under 29 3 subsection 15. As soon as practicable, the liquidator shall 29 4 present to the court a report of the claims against the 29 5 funeral establishment with the liquidator's recommendations. 29 6 The report shall include the name and address of each claimant 29 7 and the amount of the claim finally recommended. 29 8 b. The court may approve, disapprove, or modify the report 29 9 on claims by the liquidator. Reports not modified by the 29 10 court within sixty days following submission by the liquidator 29 11 shall be treated by the liquidator as allowed claims, subject 29 12 to later modification or to rulings made by the court pursuant 29 13 to subsection 15. A claim under a policy of insurance shall 29 14 not be allowed for an amount in excess of the applicable 29 15 policy limits. 29 16 20. DISTRIBUTION OF ASSETS. Under the direction of the 29 17 court, the liquidator shall pay distributions in a manner that 29 18 will assure the proper recognition of priorities and a 29 19 reasonable balance between the expeditious completion of the 29 20 liquidation and the protection of unliquidated and 29 21 undetermined claims, including third-party claims. 29 22 Distribution of assets in kind may be made at valuations set 29 23 by agreement between the liquidator and the creditor and 29 24 approved by the court. 29 25 21. UNCLAIMED AND WITHHELD FUNDS. 29 26 a. Unclaimed funds subject to distribution remaining in 29 27 the liquidator's hands when the liquidator is ready to apply 29 28 to the court for discharge, including the amount distributable 29 29 to a creditor, owner, or other person who is unknown or cannot 29 30 be found, shall be deposited with the treasurer of state, and 29 31 shall be paid without interest, except as provided in 29 32 subsection 18, to the person entitled or the person's legal 29 33 representative upon proof satisfactory to the treasurer of 29 34 state of the right to the funds. An amount on deposit not 29 35 claimed within six years from the discharge of the liquidator 30 1 is deemed to have been abandoned and shall become the property 30 2 of the state without formal escheat proceedings and be 30 3 transferred to the insurance division regulatory fund. 30 4 b. Funds withheld under subsection 14 and not distributed 30 5 shall upon discharge of the liquidator be deposited with the 30 6 treasurer of state and paid pursuant to subsection 18. Sums 30 7 remaining which under subsection 18 would revert to the 30 8 undistributed assets of the funeral establishment shall be 30 9 transferred to the insurance division regulatory fund and 30 10 become the property of the state as provided under paragraph 30 11 "a", unless the commissioner in the commissioner's discretion 30 12 petitions the court to reopen the liquidation pursuant to 30 13 subsection 23. 30 14 c. Notwithstanding any other provision of this chapter, 30 15 funds as identified in paragraph "a", with the approval of the 30 16 court, shall be made available to the commissioner for use in 30 17 the detection and prevention of future insolvencies. The 30 18 commissioner shall hold these funds in the insurance division 30 19 regulatory fund and shall pay without interest, except as 30 20 provided in subsection 18, to the person entitled to the funds 30 21 or the person's legal representative upon proof satisfactory 30 22 to the commissioner of the person's right to the funds. The 30 23 funds shall be held by the commissioner for a period of two 30 24 years at which time the rights and duties to the unclaimed 30 25 funds shall vest in the commissioner. 30 26 22. TERMINATION OF PROCEEDINGS. 30 27 a. When all assets justifying the expense of collection 30 28 and distribution have been collected and distributed under 30 29 this chapter, the liquidator shall apply to the court for 30 30 discharge. The court may grant the discharge and make any 30 31 other orders, including an order to transfer remaining funds 30 32 that are uneconomical to distribute, as appropriate. 30 33 b. Any other person may apply to the court at any time for 30 34 an order under paragraph "a". If the application is denied, 30 35 the applicant shall pay the costs and expenses of the 31 1 liquidator in resisting the application, including a 31 2 reasonable attorney's fee. 31 3 23. REOPENING LIQUIDATION. At any time after the 31 4 liquidation proceeding has been terminated and the liquidator 31 5 discharged, the commissioner or other interested party may 31 6 petition the court to reopen the proceedings for good cause 31 7 including the discovery of additional assets. The court shall 31 8 order the proceeding reopened if it is satisfied that there is 31 9 justification for the reopening. 31 10 24. DISPOSITION OF RECORDS DURING AND AFTER TERMINATION OF 31 11 LIQUIDATION. If it appears to the commissioner that the 31 12 records of a funeral establishment in process of liquidation 31 13 or completely liquidated are no longer useful, the 31 14 commissioner may recommend to the court and the court shall 31 15 direct what records shall be retained for future reference and 31 16 what records shall be destroyed. 31 17 25. EXTERNAL AUDIT OF RECEIVER'S BOOKS. The court may 31 18 order audits to be made of the books of the commissioner 31 19 relating to a receivership established under this chapter, and 31 20 a report of each audit shall be filed with the commissioner 31 21 and with the court. The books, records, and other documents 31 22 of the receivership shall be made available to the auditor at 31 23 any time without notice. The expense of an audit shall be 31 24 considered a cost of administration of the receivership. 31 25 Sec. 11. Section 523E.1, subsection 1, Code 1995, is 31 26 amended to read as follows: 31 27 1. If an agreement is made by a person to furnish, upon 31 28 the future death of a person named or implied in the 31 29 agreement, cemetery merchandise, a minimum of one hundred 31 30 twenty-five percent of the wholesale cost of the cemetery 31 31 merchandise, based upon the current advertised prices 31 32 available from a manufacturer or wholesaler who has delivered 31 33 the same or substantially the same type of merchandise to the 31 34 seller during the last twelve months, shall be and remain 31 35 trust funds until purchase of the merchandise or the 32 1 occurrence of the death of the person for whose benefit the 32 2 funds were paid, unless the funds are sooner released to the 32 3 person making the payment by mutual consent of the parties. 32 4 Payments otherwise subject to this section are not exempt 32 5 merely because they are held in certificates of deposit. The 32 6 commissioner may adopt rules to prohibit the commingling of 32 7 trust funds with other funds of the seller. 32 8 Sec. 12. Section 523E.1, Code 1995, is amended by adding 32 9 the following new subsection: 32 10 NEW SUBSECTION. 5. An agreement may be funded by 32 11 insurance proceeds derived from a policy issued by an 32 12 insurance company authorized to conduct business in this 32 13 state. Such funding may be in lieu of a trust fund if the 32 14 payments are made directly to the insurance company by the 32 15 purchaser of the agreement. 32 16 Sec. 13. Section 523E.2, subsection 1, paragraphs a and c, 32 17 Code 1995, are amended to read as follows: 32 18 a. All funds held in trust under section 523E.1 shall be 32 19 deposited in a state or federally insured bank, savings and 32 20 loan association, or credit union authorized to conduct 32 21 business in this state, or trust departmentthereofof such 32 22 bank, savings and loan association, or credit union, or in a 32 23 trust company authorized to conduct business in this state, 32 24 within fifteen days after the close of the month of receipt of 32 25 the funds and shall be held as provided in paragraph "g" for 32 26 the designated beneficiary until released pursuant to section 32 27 523E.1. 32 28 c. The seller under an agreement referred to in section 32 29 523E.1 shall file with the commissioner not later than March 1 32 30 of each year a report including the following information: 32 31 (1) The name and address of the seller and the name and 32 32 address of the establishment that will provide the cemetery 32 33 merchandise. 32 34 (2)The name of the purchaser, beneficiary, and the amount32 35of each agreement under section 523E.1 made in the preceding33 1year and the date on which it was made.The balance of each 33 2 trust account as of the end of the immediately preceding 33 3 calendar year, identified by the name of the purchaser or the 33 4 beneficiary, and a report of any amounts withdrawn from trust 33 5 and the reason for each withdrawal. 33 6 (3)The total value of agreements subject to section33 7523E.1 entered into, the total amount paid pursuant to those33 8agreements, and the total amount deposited in trust as33 9required under section 523E.1, during the preceding year.A 33 10 description of insurance funding outstanding at the end of the 33 11 immediately preceding calendar year, identified by the name of 33 12 the purchaser or the beneficiary, and a report of any 33 13 insurance payments received by the seller. 33 14(4) The amount of any payments received pursuant to33 15agreements reported in previous years in accordance with33 16subparagraphs (2) and (3) and the amount of those payments33 17deposited in trust for each purchaser.33 18(5) The change in status of any trust account, for each33 19purchaser, any other amounts withdrawn from trust and the33 20reason for each withdrawal. However, regular increments of33 21interest or income need not be reported on a yearly basis.33 22(6) The name and address of the financial institution in33 23which trust funds were deposited, and the name and address of33 24each insurance company which funds agreements under section33 25523E.1.33 26(7) The name and address of each purchaser of cemetery33 27merchandise delivered in lieu of trusting pursuant to section33 28523E.1, and a description of that merchandise for each33 29purchaser.33 30(8)(4)TheA complete inventory of cemetery merchandise 33 31and its location in the seller's possession that has been33 32 delivered in lieu of trusting pursuant to section 523E.1.33 33(9) Other information reasonably required by the33 34commissioner for purposes of administration of this chapter.33 35The information required by subparagraphs (7) and (8) shall34 1include, including the location of the merchandise, serial 34 2 numbers or warehouse receipt numbers, identified by the name 34 3 of the purchaser or the beneficiary, and a verified statement 34 4 of a certified public accountant that the certified public 34 5 accountant has conducted a physical inventory of the cemetery 34 6 merchandisespecified in subparagraph (8)and that each item 34 7 of that merchandise is in the seller's possession at the 34 8 specified location. The statement shall be on a form 34 9 prescribed by the commissioner.The commissioner shall permit34 10the filing of a unified annual report by a seller subject to34 11both chapter 523A and this chapter.34 12 The report shall be accompanied by a filing fee determined 34 13 by the commissioner which shall be sufficient to defray the 34 14 costs of administering this chapter. 34 15 Sec. 14. Section 523E.2, subsection 6, Code 1995, is 34 16 amended to read as follows: 34 17 6. This chapter does not prohibit the funding of an 34 18 agreementotherwise subject to section 523E.1by insurance 34 19 proceeds derived from a policy issued by an insurance company 34 20 authorized to conduct business in this state. The seller of 34 21 an agreement subject to this chapter which is to be funded by 34 22 insurance proceeds shall obtain all permits required to be 34 23 obtained under this chapter and comply with the reporting 34 24 requirements of this section. 34 25 Sec. 15. Section 523E.8, subsection 1, paragraphs e, h, 34 26 and j, Code 1995, are amended to read as follows: 34 27 e. State clearly whether the agreement is a guaranteed 34 28 price contract or a nonguaranteed price contract. Each 34 29 nonguaranteed price contract shall contain in twelve point 34 30 bold type, an explanation of the consequences in substantially 34 31 the following language: 34 32 THE PRICES OF MERCHANDISE AND SERVICES UNDER THIS CONTRACT 34 33 ARE SUBJECT TO CHANGE IN THE FUTURE. ANY FUNDS PAID UNDER 34 34 THIS CONTRACT ARE ONLY A DEPOSIT TO BE APPLIED, TOGETHER WITH 34 35 ACCRUED INCOME, TOWARD THE FINAL COSTS OF THE MERCHANDISE OR 35 1 SERVICES CONTRACTED FOR. ADDITIONAL CHARGES MAY BE REQUIRED. 35 2 h. Explain the disposition of theinterest and disclose35 3what fees and expenses may be charged if incurredincome 35 4 generated from investments, include a statement of fees, 35 5 expenses, and taxes which may be deducted, and include a 35 6 statement of the buyer's responsibility for income taxes owed 35 7 on the income, if applicable. 35 8 j.State the name and address of the commissioner.35 9 Include an explanation of regulatory oversight by the 35 10 insurance division in twelve point bold type, in substantially 35 11 the following language: 35 12 THIS CONTRACT MUST BE REPORTED TO THE IOWA INSURANCE 35 13 DIVISION BY THE FIRST DAY OF MARCH OF THE FOLLOWING YEAR. YOU 35 14 MAY CALL THE INSURANCE DIVISION AT (INSERT TELEPHONE NUMBER) 35 15 TO CONFIRM THAT YOUR CONTRACT HAS BEEN REPORTED. WRITTEN 35 16 INQUIRIES OR COMPLAINTS SHOULD BE MAILED TO THE FOLLOWING 35 17 ADDRESS: IOWA SECURITIES BUREAU (INSERT ADDRESS). 35 18 Sec. 16. Section 523E.8, subsection 1, Code 1995, is 35 19 amended by adding the following new subsection: 35 20 NEW SUBSECTION. 1A. The commissioner may adopt rules 35 21 establishing disclosure and format requirements to promote 35 22 consumers' understanding of the cemetery merchandise purchased 35 23 and the available funding mechanisms under an agreement for 35 24 cemetery merchandise under this chapter. 35 25 Sec. 17. Section 523E.8, Code 1995, is amended by adding 35 26 the following new subsection: 35 27 NEW SUBSECTION. 3. The seller shall disclose at the time 35 28 an application is made by an individual and prior to accepting 35 29 the applicant's initial premium or deposit for a preneed 35 30 funeral contract or prearrangement subject to section 523E.1 35 31 which is funded by a life insurance policy, the following 35 32 information: 35 33 a. That a life insurance policy is involved or being used 35 34 to fund an agreement. 35 35 b. The nature of the relationship among the soliciting 36 1 agent or agents, the provider of the funeral or cemetery 36 2 merchandise or services, the administrator, and any other 36 3 person. 36 4 c. The relationship of the life insurance policy to the 36 5 funding of the prearrangement and the nature and existence of 36 6 any guarantees relating to the prearrangement. 36 7 d. The impact on the prearrangement of the following: 36 8 (1) Changes in the life insurance policy including, but 36 9 not limited to, changes in the assignment, beneficiary 36 10 designation, or use of proceeds. 36 11 (2) Any penalties to be incurred by the policyholder as a 36 12 result of the failure to make premium payments. 36 13 (3) Penalties to be incurred or cash to be received as a 36 14 result of the cancellation or surrender of the life insurance 36 15 policy. 36 16 e. A list of merchandise and services which are applied or 36 17 contracted for in the prearrangement and all relevant 36 18 information concerning the price of the merchandise and 36 19 services, including an indication that the purchase price is 36 20 either guaranteed at the time of purchase or to be determined 36 21 at the time of need. 36 22 f. All relevant information concerning what occurs and 36 23 whether any entitlements or obligations arise if there is a 36 24 difference between the proceeds of the life insurance policy 36 25 and the amount actually needed to fund the agreement. 36 26 g. Any penalties or restrictions, including but not 36 27 limited to, geographic restrictions or the inability of the 36 28 provider to perform, on the delivery of merchandise, services, 36 29 or the prearrangement guarantee. 36 30 h. That a sales commission or other form of compensation 36 31 is being paid and, if so, the identity of the individuals or 36 32 entities to whom it is paid. 36 33 Sec. 18. Section 523E.20, Code 1995, is amended to read as 36 34 follows: 36 35 523E.20 INSURANCE DIVISION'S REGULATORY FUND. 37 1 The insurance division may authorize the creation of a 37 2 special revenue fund in the state treasury, to be known as the 37 3 insurance division regulatory fund.Commencing July 1, 1990,37 4and annually thereafter, theThe commissioner shall allocate 37 5 annually from the fees paid pursuant to section 523E.2,one37 6dollartwo dollars for each agreement reported on an 37 7 establishment permit holder's annual report for deposit to the 37 8 regulatory fund. The remainder of the fees collected pursuant 37 9 to section 523E.2 shall be deposited into the general fund of 37 10 the state. In addition, on May 1 of19941996 and19951997, 37 11 the commissioner, to the extent necessary to fund consumer 37 12 education, audits, investigations, payments under contract 37 13 with licensed establishments to provide funeral and cemetery 37 14 merchandise or services in the event of statutory 37 15 noncompliance by the initial seller, liquidations, and 37 16 receiverships, shall assess establishment permit holdersfive37 17 two dollars for each agreement reported on the establishment 37 18 permit holder's annual report of sales executed during the 37 19 preceding year, which shall be deposited in the insurance 37 20 division regulatory fund.However, if the balance of the37 21regulatory fund on that July 1 exceeds two hundred thousand37 22dollars, the allocation to the regulatory fund shall not be37 23made and the total sum of the fees paid pursuant to section37 24523E.2 shall be deposited in the general fund of the state.37 25 The moneys in the regulatory fund shall be retained in the 37 26 fund. The moneys are appropriated and, subject to 37 27 authorization by the commissioner, may be used to pay 37 28 auditors, audit expenses, investigative expenses, and the 37 29 expenses of receiverships established pursuant to section 37 30 523E.19. An annual assessment shall not be imposed if the 37 31 current balance of the fund exceeds two hundred thousand 37 32 dollars. 37 33 Sec. 19. NEW SECTION. 523E.21 LICENSE REVOCATION &endash; 37 34 RECOMMENDATION BY COMMISSIONER TO BOARD OF MORTUARY SCIENCE 37 35 EXAMINERS. 38 1 Upon a determination by the commissioner that grounds exist 38 2 for an administrative license revocation action by the board 38 3 of mortuary science examiners under chapter 156, the 38 4 commissioner may forward to the board the grounds for the 38 5 determination, including all evidence in the possession of the 38 6 commissioner, so that the board may proceed with the matter as 38 7 deemed appropriate. 38 8 Sec. 20. NEW SECTION. 523J.1 DEFINITIONS. 38 9 As used in this chapter, unless the context otherwise 38 10 requires: 38 11 1. "Abandoned cemetery" means any cemetery where there has 38 12 been a failure to cut grass or weeds or care for graves, grave 38 13 markers, walls, fences, driveways, and buildings, or for which 38 14 proper records have not been maintained. 38 15 2. "Cemetery" means a cemetery, mausoleum, columbarium, or 38 16 other space held for the purpose of burial, entombment, or 38 17 inurnment of human remains, and which is subject to this 38 18 chapter. 38 19 3. "Commissioner" means the commissioner of insurance or 38 20 the deputy appointed under section 502.601. 38 21 4. "Interment rights" means a right of use conveyed by 38 22 contract or property ownership to inter human remains in a 38 23 columbarium, grave, mausoleum, lawn crypt, or undeveloped 38 24 space. 38 25 5. "Perpetual care cemetery" means a cemetery which has 38 26 established a perpetual care fund for the maintenance, repair, 38 27 and care of all interment spaces subject to perpetual care 38 28 within the cemetery in compliance with section 566A.3 or 38 29 566A.4. 38 30 Sec. 21. NEW SECTION. 523J.2 CEMETERIES COMMENCING 38 31 BUSINESS AFTER JULY 1, 1995. 38 32 A cemetery which is organized or commences business in this 38 33 state on or after July 1, 1995, shall operate as a perpetual 38 34 care cemetery and is subject to this chapter and other 38 35 applicable law. 39 1 Sec. 22. NEW SECTION. 523J.3 PERMIT REQUIREMENTS. 39 2 1. A perpetual care cemetery shall not sell or offer 39 3 interment rights to the public without a permit as provided 39 4 for in this section. 39 5 2. Applications for a permit shall be made to and filed 39 6 with the commissioner on forms approved by the commissioner 39 7 and accompanied by a filing fee of twenty dollars. If the 39 8 application contains the following information, the 39 9 commissioner shall issue the license: 39 10 (a) The name and principal address of the applicant. 39 11 (b) The identity of the applicant's owner or owners. 39 12 (c) Evidence of a trust fund for cemetery maintenance and 39 13 care in compliance with section 566A.3 or 566A.4. 39 14 3. Each permit issued under this chapter shall expire on 39 15 June 30 of the year following the date of issuance. 39 16 Sec. 23. NEW SECTION. 523J.4 DENIAL, SUSPENSION, OR 39 17 REVOCATION OF PERMIT. 39 18 The commissioner, pursuant to chapter 17A, may deny, 39 19 suspend, or revoke any permit to operate a cemetery if the 39 20 commissioner finds any of the following: 39 21 1. The cemetery has committed a fraudulent practice, or 39 22 the cemetery's trust assets, warehoused merchandise, surety 39 23 bonds, or insurance funding are in material noncompliance with 39 24 chapter 523A or 523E or section 566A.3 or 566A.4. 39 25 2. An owner or officer of the cemetery has been convicted 39 26 of a felony related to the sale of interment rights or the 39 27 sale of funeral services, funeral merchandise, or cemetery 39 28 merchandise, as defined in section 523A.5, subsection 2, 39 29 paragraphs "a" and "b", and section 523E.5, subsection 2, 39 30 paragraph "a". 39 31 Sec. 24. NEW SECTION. 523J.5 LIQUIDATION. 39 32 1. GROUNDS FOR LIQUIDATION. The commissioner may petition 39 33 the district court for an order directing the commissioner to 39 34 liquidate a perpetual care cemetery on any of the following 39 35 grounds: 40 1 a. The cemetery's trust fund is in material noncompliance 40 2 with the requirements of section 566A.3 or 566A.4 and is 40 3 insolvent. 40 4 b. The cemetery's trust fund is in material noncompliance 40 5 with the requirements of section 566A.3 or 566A.4 and the 40 6 condition of the cemetery is such that the further transaction 40 7 of business would be hazardous, financially or otherwise, to 40 8 its customers or the public. 40 9 c. The cemetery has been abandoned. 40 10 2. LIQUIDATION ORDER. 40 11 a. An order to liquidate the business of a perpetual care 40 12 cemetery shall appoint the commissioner as liquidator and 40 13 shall direct the liquidator to immediately take possession of 40 14 the assets of the cemetery and to administer them under the 40 15 general supervision of the court. The liquidator is vested 40 16 with the title to the property, contracts, and rights of 40 17 action and the books and records of the cemetery ordered 40 18 liquidated, wherever located, as of the entry of the final 40 19 order of liquidation. The filing or recording of the order 40 20 with the clerk of court and the recorder of deeds of the 40 21 county in which its principal office or place of business is 40 22 located, or, in the case of real estate with the recorder of 40 23 deeds of the county where the property is located, is notice 40 24 as a deed, bill of sale, or other evidence of title duly filed 40 25 or recorded with the recorder of deeds. 40 26 b. Upon issuance of an order, the rights and liabilities 40 27 of a cemetery and of the cemetery's creditors, customers, 40 28 owners, and other persons interested in the cemetery's estate 40 29 shall become fixed as of the date of the entry of the order of 40 30 liquidation, except as provided in subsection 14. 40 31 c. At the time of petitioning for an order of liquidation, 40 32 or at any time after the time of petitioning, the 40 33 commissioner, after making appropriate findings of a 40 34 cemetery's insolvency, may petition the court for a 40 35 declaration of insolvency. After providing notice and hearing 41 1 as it deems proper, the court may make the declaration. 41 2 d. An order issued under this section shall require 41 3 accounting to the court by the liquidator. Accountings, at a 41 4 minimum, must include all funds received or disbursed by the 41 5 liquidator during the current period. An accounting shall be 41 6 filed within one year of the liquidation order and at such 41 7 other times as the court may require. 41 8 e. Within five days after the initiation of an appeal of 41 9 an order of liquidation, which order has not been stayed, the 41 10 commissioner shall present for the court's approval a plan for 41 11 the continued performance of the cemetery's obligations during 41 12 the pendency of an appeal. The plan shall provide for the 41 13 continued performance of interment rights contracts in the 41 14 normal course of events, notwithstanding the grounds alleged 41 15 in support of the order of liquidation including the ground of 41 16 insolvency. If the defendant cemetery's financial condition, 41 17 in the judgment of the commissioner, will not support the full 41 18 performance of all obligations during the appeal pendency 41 19 period, the plan may prefer the claims of certain customers 41 20 and claimants over creditors and interested parties as well as 41 21 other customers and claimants, as the commissioner finds to be 41 22 fair and equitable considering the relative circumstances of 41 23 such customers and claimants. The court shall examine the 41 24 plan submitted by the commissioner and if it finds the plan to 41 25 be in the best interests of the parties, the court shall 41 26 approve the plan. An action shall not lie against the 41 27 commissioner or any of the commissioner's deputies, agents, 41 28 clerks, assistants, or attorneys by any party based on 41 29 preference in an appeal pendency plan approved by the court. 41 30 3. POWERS OF LIQUIDATOR. 41 31 a. The liquidator may do any of the following: 41 32 (1) Appoint a special deputy to act for the liquidator 41 33 under this chapter, and determine the special deputy's 41 34 reasonable compensation. The special deputy shall have all 41 35 the powers of the liquidator granted by this section. The 42 1 special deputy shall serve at the pleasure of the liquidator. 42 2 (2) Hire employees and agents, legal counsel, accountants, 42 3 appraisers, consultants, and other personnel as the 42 4 commissioner may deem necessary to assist in the liquidation. 42 5 (3) With the approval of the court fix reasonable 42 6 compensation of employees and agents, legal counsel, 42 7 accountants, appraisers and consultants. 42 8 (4) Pay reasonable compensation to persons appointed and 42 9 defray from the funds or assets of the cemetery all expenses 42 10 of taking possession of, conserving, conducting, liquidating, 42 11 disposing of, or otherwise dealing with the business and 42 12 property of the cemetery. If the property of the cemetery 42 13 does not contain sufficient cash or liquid assets to defray 42 14 the costs incurred, the commissioner may advance the costs so 42 15 incurred out of the insurance division cemetery fund. Amounts 42 16 so advanced for expenses of administration shall be repaid to 42 17 the insurance division cemetery fund for the use of the 42 18 division out of the first available moneys of the cemetery. 42 19 (5) Hold hearings, subpoena witnesses, and compel their 42 20 attendance, administer oaths, examine a person under oath, and 42 21 compel a person to subscribe to the person's testimony after 42 22 it has been correctly reduced to writing, and in connection to 42 23 the proceedings require the production of books, papers, 42 24 records, or other documents which the liquidator deems 42 25 relevant to the inquiry. 42 26 (6) Collect debts and moneys due and claims belonging to 42 27 the cemetery, wherever located. Pursuant to this 42 28 subparagraph, the liquidator may do any of the following: 42 29 (a) Institute timely action in other jurisdictions to 42 30 forestall garnishment and attachment proceedings against 42 31 debts. 42 32 (b) Perform acts as are necessary or expedient to collect, 42 33 conserve, or protect its assets or property, including the 42 34 power to sell, compound, compromise, or assign debts for 42 35 purposes of collection upon terms and conditions as the 43 1 liquidator deems best. 43 2 (c) Pursue any creditor's remedies available to enforce 43 3 claims. 43 4 (7) Conduct public and private sales of the property of 43 5 the cemetery. 43 6 (8) Use assets of the cemetery under a liquidation order 43 7 to transfer obligations of preneed funeral contracts to a 43 8 solvent cemetery, if the transfer can be accomplished without 43 9 prejudice to applicable priorities under subsection 18. 43 10 (9) Acquire, hypothecate, encumber, lease, improve, sell, 43 11 transfer, abandon, or otherwise dispose of or deal with 43 12 property of the cemetery at its market value or upon terms and 43 13 conditions as are fair and reasonable. The liquidator shall 43 14 also have power to execute, acknowledge, and deliver deeds, 43 15 assignments, releases, and other instruments necessary to 43 16 effectuate a sale of property or other transaction in 43 17 connection with the liquidation. 43 18 (10) Borrow money on the security of the cemetery's assets 43 19 or without security and execute and deliver documents 43 20 necessary to that transaction for the purpose of facilitating 43 21 the liquidation. Money borrowed pursuant to this subparagraph 43 22 shall be repaid as an administrative expense and have priority 43 23 over any other class 1 claims under the priority of 43 24 distribution established in subsection 18. 43 25 (11) Enter into contracts as necessary to carry out the 43 26 order to liquidate and affirm or disavow contracts to which 43 27 the cemetery is a party. 43 28 (12) Continue to prosecute and to institute in the name of 43 29 the cemetery or in the liquidator's own name any and all suits 43 30 and other legal proceedings, in this state or elsewhere, and 43 31 to abandon the prosecution of claims the liquidator deems 43 32 unprofitable to pursue further. 43 33 (13) Prosecute an action on behalf of the creditors, 43 34 customers, or owners against an officer of the cemetery or any 43 35 other person. 44 1 (14) Remove records and property of the cemetery to the 44 2 offices of the commissioner or to other places as may be 44 3 convenient for the purposes of efficient and orderly execution 44 4 of the liquidation. 44 5 (15) Deposit in one or more banks in this state sums as 44 6 are required for meeting current administration expenses and 44 7 distributions. 44 8 (16) Unless the court orders otherwise, invest funds not 44 9 currently needed. 44 10 (17) File necessary documents for recording in the office 44 11 of a recorder of deeds or record office in this state or 44 12 elsewhere where property of the cemetery is located. 44 13 (18) Assert defenses available to the cemetery as against 44 14 third persons including statutes of limitations, statutes of 44 15 fraud, and the defense of usury. A waiver of a defense by the 44 16 cemetery after a petition in liquidation has been filed shall 44 17 not bind the liquidator. 44 18 (19) Exercise and enforce the rights, remedies, and powers 44 19 of a creditor, customer, or owner, including the power to 44 20 avoid transfer or lien that may be given by the general law 44 21 and that is not included within subsections 7 through 9. 44 22 (20) Intervene in a proceeding wherever instituted that 44 23 might lead to the appointment of a receiver or trustee, and 44 24 act as the receiver or trustee whenever the appointment is 44 25 offered. 44 26 (21) Exercise powers now held or later conferred upon 44 27 receivers by the laws of this state which are not inconsistent 44 28 with this chapter. 44 29 b. This subsection does not limit the liquidator or 44 30 exclude the liquidator from exercising a power not listed in 44 31 paragraph "a" that may be necessary or appropriate to 44 32 accomplish the purposes of this chapter. 44 33 4. NOTICE TO CREDITORS AND OTHERS. 44 34 a. Unless the court otherwise directs, the liquidator 44 35 shall give notice of the liquidation order as soon as possible 45 1 by doing all of the following: 45 2 (1) By first class mail to all persons known or reasonably 45 3 expected to have claims against the cemetery, including 45 4 customers who purchased interment rights, by mailing a notice 45 5 to their last known address as indicated by the records of the 45 6 cemetery. 45 7 (2) By publication in a newspaper of general circulation 45 8 in the county in which the cemetery has its principal place of 45 9 business and in other locations as the liquidator deems 45 10 appropriate. 45 11 b. Notice to potential claimants under paragraph "a" shall 45 12 require claimants to file with the liquidator their claims 45 13 together with proper proofs of the claim under subsection 13 45 14 on or before a date the liquidator shall specify in the 45 15 notice. Claimants shall keep the liquidator informed of their 45 16 changes of address, if any. 45 17 c. If notice is given pursuant to this section, the 45 18 distribution of assets of the cemetery under this chapter 45 19 shall be conclusive with respect to claimants, whether or not 45 20 a claimant actually received notice. 45 21 5. ACTIONS BY AND AGAINST LIQUIDATOR. 45 22 a. After the issuance of an order appointing a liquidator 45 23 of a cemetery, an action at law or equity shall not be brought 45 24 against the cemetery in this state or elsewhere, and existing 45 25 actions shall not be maintained or further presented after 45 26 issuance of the order. Whenever in the liquidator's judgment, 45 27 protection of the estate of the cemetery necessitates 45 28 intervention in an action against the cemetery that is pending 45 29 outside this state, the liquidator may intervene in the 45 30 action. The liquidator may defend, at the expense of the 45 31 estate of the cemetery, an action in which the liquidator 45 32 intervenes under this section. 45 33 b. Within two years or such additional time as applicable 45 34 law may permit, the liquidator, after the issuance of an order 45 35 for liquidation, may institute an action or proceeding on 46 1 behalf of the estate of the cemetery upon any cause of action 46 2 against which the period of limitation fixed by applicable law 46 3 has not expired at the time of the filing of the petition upon 46 4 which the order is entered. If a period of limitation is 46 5 fixed by agreement for instituting a suit or proceeding upon a 46 6 claim, or for filing a claim, proof of claim, proof of loss, 46 7 demand, notice, or the like, or if in a proceeding, judicial 46 8 or otherwise, a period of limitation is fixed in the 46 9 proceeding or pursuant to applicable law for taking an action, 46 10 filing a claim or pleading, or doing an act, and if the period 46 11 had not expired at the date of the filing of the petition, the 46 12 liquidator, for the benefit of the estate, may take any action 46 13 or do any act, required of or permitted to the cemetery, 46 14 within a period of one hundred eighty days subsequent to the 46 15 entry of an order for liquidation, or within a further period 46 16 as is shown to the satisfaction of the court not to be 46 17 unfairly prejudicial to the other party. 46 18 c. A statute of limitation or defense of laches shall not 46 19 run with respect to an action against a cemetery between the 46 20 filing of a petition for liquidation against the cemetery and 46 21 the denial of the petition. An action against the cemetery 46 22 that might have been commenced when the petition was filed may 46 23 be commenced for at least sixty days after the petition is 46 24 denied. 46 25 6. COLLECTION AND LIST OF ASSETS. 46 26 a. As soon as practicable after the liquidation order but 46 27 not later than one hundred twenty days after such order, the 46 28 liquidator shall prepare in duplicate a list of the cemetery's 46 29 assets. The list shall be amended or supplemented as the 46 30 liquidator may determine. One copy shall be filed in the 46 31 office of the clerk of court and one copy shall be retained 46 32 for the liquidator's files. Amendments and supplements shall 46 33 be similarly filed. 46 34 b. The liquidator shall reduce the assets to a degree of 46 35 liquidity that is consistent with the effective execution of 47 1 the liquidation. 47 2 c. A submission to the court for distribution of assets in 47 3 accordance with subsection 11 fulfills the requirements of 47 4 paragraph "a". 47 5 7. FRAUDULENT TRANSFERS PRIOR TO PETITION. 47 6 a. A transfer made and an obligation incurred by a 47 7 cemetery within one year prior to the filing of a successful 47 8 petition for liquidation under this chapter is fraudulent as 47 9 to then existing and future creditors if made or incurred 47 10 without fair consideration, or with actual intent to hinder, 47 11 delay, or defraud either existing or future creditors. A 47 12 fraudulent transfer made or an obligation incurred by a 47 13 cemetery ordered to be liquidated under this chapter may be 47 14 avoided by the receiver, except as to a person who in good 47 15 faith is a purchaser, lienor, or obligee for a present fair 47 16 equivalent value. A purchaser, lienor, or obligee, who in 47 17 good faith has given a consideration less than fair for such 47 18 transfer, lien, or obligation, may retain the property, lien, 47 19 or obligation as security for repayment. The court, on due 47 20 notice, may order any such transfer or obligation to be 47 21 preserved for the benefit of the estate, and in that event, 47 22 the receiver shall succeed to and may enforce the rights of 47 23 the purchaser, lienor, or obligee. 47 24 b. (1) A transfer of property other than real property is 47 25 made when it becomes perfected so that a subsequent lien 47 26 obtainable by legal or equitable proceedings on a simple 47 27 contract could not become superior to the rights of the 47 28 transferee under subsection 9, paragraph "c". 47 29 (2) A transfer of real property is made when it becomes 47 30 perfected so that a subsequent bona fide purchaser from the 47 31 cemetery could not obtain rights superior to the rights of the 47 32 transferee. 47 33 (3) A transfer which creates an equitable lien is not 47 34 perfected if there are available means by which a legal lien 47 35 could be created. 48 1 (4) A transfer not perfected prior to the filing of a 48 2 petition for liquidation is deemed to be made immediately 48 3 before the filing of the successful petition. 48 4 (5) This subsection applies whether or not there are or 48 5 were creditors who might have obtained a lien or persons who 48 6 might have become bona fide purchasers. 48 7 8. FRAUDULENT TRANSFER AFTER PETITION. 48 8 a. After a petition for liquidation has been filed a 48 9 transfer of real property of the cemetery made to a person 48 10 acting in good faith is valid against the receiver if made for 48 11 a present fair equivalent value. If the transfer was not made 48 12 for a present fair equivalent value, then the transfer is 48 13 valid to the extent of the present consideration actually paid 48 14 for which amount the transferee shall have a lien on the 48 15 property transferred. The commencement of a proceeding in 48 16 liquidation is constructive notice upon the recording of a 48 17 copy of the petition for or order of liquidation with the 48 18 recorder of deeds in the county where any real property in 48 19 question is located. The exercise by a court of the United 48 20 States or a state or jurisdiction to authorize a judicial sale 48 21 of real property of the cemetery within a county in a state 48 22 shall not be impaired by the pendency of a proceeding unless 48 23 the copy is recorded in the county prior to the consummation 48 24 of the judicial sale. 48 25 b. After a petition for liquidation has been filed and 48 26 before either the receiver takes possession of the property of 48 27 the cemetery or an order of liquidation is granted: 48 28 (1) A transfer of the property, other than real property, 48 29 of the cemetery made to a person acting in good faith is valid 48 30 against the receiver if made for a present fair equivalent 48 31 value. If the transfer was not made for a present fair 48 32 equivalent value, then the transfer is valid to the extent of 48 33 the present consideration actually paid for which amount the 48 34 transferee shall have a lien on the property transferred. 48 35 (2) If acting in good faith, a person indebted to the 49 1 cemetery or holding property of the cemetery may pay the debt 49 2 or deliver the property, or any part of the property, to the 49 3 cemetery or upon the cemetery's order as if the petition were 49 4 not pending. 49 5 (3) A person having actual knowledge of the pending 49 6 liquidation is not acting in good faith. 49 7 (4) A person asserting the validity of a transfer under 49 8 this subsection has the burden of proof. Except as provided 49 9 in this subsection, a transfer by or on behalf of the cemetery 49 10 after the date of the petition for liquidation by any person 49 11 other than the liquidator is not valid against the liquidator. 49 12 c. A person receiving any property from the cemetery or 49 13 any benefit of the property of the cemetery which is a 49 14 fraudulent transfer under paragraph "a" is personally liable 49 15 for the property or benefit and shall account to the 49 16 liquidator. 49 17 d. This chapter does not impair the negotiability of 49 18 currency or negotiable instruments. 49 19 9. VOIDABLE PREFERENCES AND LIENS. 49 20 a. (1) A preference is a transfer of the property of a 49 21 cemetery to or for the benefit of a creditor for an antecedent 49 22 debt made or suffered by the cemetery within one year before 49 23 the filing of a successful petition for liquidation under this 49 24 chapter, the effect of which transfer may be to enable the 49 25 creditor to obtain a greater percentage of this debt than 49 26 another creditor of the same class would receive. If a 49 27 liquidation order is entered while the cemetery is already 49 28 subject to a receivership, then the transfers are preferences 49 29 if made or suffered within one year before the filing of the 49 30 successful petition for the receivership, or within two years 49 31 before the filing of the successful petition for liquidation, 49 32 whichever time is shorter. 49 33 (2) A preference may be avoided by the liquidator if any 49 34 of the following exist: 49 35 (a) The cemetery was insolvent at the time of the 50 1 transfer. 50 2 (b) The transfer was made within four months before the 50 3 filing of the petition. 50 4 (c) At the time the transfer was made, the creditor 50 5 receiving it or to be benefited by the transfer or the 50 6 creditor's agent acting with reference to the transfer had 50 7 reasonable cause to believe that the cemetery was insolvent or 50 8 was about to become insolvent. 50 9 (d) The creditor receiving the transfer was an officer, or 50 10 an employee, attorney, or other person who was in fact in a 50 11 position of comparable influence in the cemetery to an officer 50 12 whether or not the person held the position of an officer, 50 13 owner, or other person, firm, corporation, association, or 50 14 aggregation of persons with whom the cemetery did not deal at 50 15 arm's length. 50 16 (3) Where the preference is voidable, the liquidator may 50 17 recover the property. If the property has been converted, the 50 18 liquidator may recover its value from a person who has 50 19 received or converted the property. However, if a bona fide 50 20 purchaser or lienor has given less than fair equivalent value, 50 21 the purchaser or lienor shall have a lien upon the property to 50 22 the extent of the consideration actually given. Where a 50 23 preference by way of lien or security interest is voidable, 50 24 the court may on due notice order the lien or security 50 25 interest to be preserved for the benefit of the estate, in 50 26 which event the lien or title shall pass to the liquidator. 50 27 b. (1) A transfer of property other than real property is 50 28 made when it becomes perfected so that a subsequent lien 50 29 obtainable by legal or equitable proceedings on a simple 50 30 contract could not become superior to the rights of the 50 31 transferee. 50 32 (2) A transfer of real property is made when it becomes 50 33 perfected so that a subsequent bona fide purchaser from the 50 34 cemetery could not obtain rights superior to the rights of the 50 35 transferee. 51 1 (3) A transfer which creates an equitable lien is not 51 2 perfected if there are available means by which a legal lien 51 3 could be created. 51 4 (4) A transfer not perfected prior to the filing of a 51 5 petition for liquidation is deemed to be made immediately 51 6 before the filing of the successful petition. 51 7 (5) This subsection applies whether or not there are or 51 8 were creditors who might have obtained liens or persons who 51 9 might have become bona fide purchasers. 51 10 c. (1) A lien obtainable by legal or equitable 51 11 proceedings upon a simple contract is one arising in the 51 12 ordinary course of the proceedings upon the entry or docketing 51 13 of a judgment or decree, or upon attachment, garnishment, 51 14 execution, or like process, whether before, upon, or after 51 15 judgment or decree and whether before or upon levy. It does 51 16 not include liens which under applicable law are given a 51 17 special priority over other liens which are prior in time. 51 18 (2) A lien obtainable by legal or equitable proceedings 51 19 could become superior to the rights of a transferee, or a 51 20 purchaser could obtain rights superior to the rights of a 51 21 transferee within the meaning of paragraph "b", if such 51 22 consequences would follow only from the lien or purchase 51 23 itself, or from the lien or purchase followed by a step wholly 51 24 within the control of the respective lienholder or purchaser, 51 25 with or without the aid of ministerial action by public 51 26 officials. However, a lien could not become superior and a 51 27 purchase could not create superior rights for the purpose of 51 28 paragraph "b" through an act subsequent to the obtaining of a 51 29 lien or subsequent to a purchase which requires the agreement 51 30 or concurrence of any third party or which requires further 51 31 judicial action or ruling. 51 32 d. A transfer of property for or on account of a new and 51 33 contemporaneous consideration, which is under paragraph "b" 51 34 made or suffered after the transfer because of delay in 51 35 perfecting it, does not become a transfer for or on account of 52 1 an antecedent debt if any acts required by the applicable law 52 2 to be performed in order to perfect the transfer as against 52 3 liens or a bona fide purchaser's rights are performed within 52 4 twenty-one days or any period expressly allowed by the law, 52 5 whichever is less. A transfer to secure a future loan, if a 52 6 loan is actually made, or a transfer which becomes security 52 7 for a future loan, shall have the same effect as a transfer 52 8 for or on account of a new and contemporaneous consideration. 52 9 e. If a lien voidable under paragraph "a", subparagraph 52 10 (2) has been dissolved by the furnishing of a bond or other 52 11 obligation, the surety on which has been indemnified directly 52 12 or indirectly by the transfer or the creation of a lien upon 52 13 property of a cemetery before the filing of a petition under 52 14 this chapter which results in a liquidation order, the 52 15 indemnifying transfer or lien is also voidable. 52 16 f. The property affected by a lien voidable under 52 17 paragraphs "a" and "e" is discharged from the lien. The 52 18 property and any of the indemnifying property transferred to 52 19 or for the benefit of a surety shall pass to the liquidator. 52 20 However, the court may on due notice order a lien to be 52 21 preserved for the benefit of the estate and the court may 52 22 direct that the conveyance be executed to evidence the title 52 23 of the liquidator. 52 24 g. The court shall have summary jurisdiction of a 52 25 proceeding by the liquidator to hear and determine the rights 52 26 of the parties under this section. Reasonable notice of 52 27 hearing in the proceeding shall be given to all parties in 52 28 interest, including the obligee of a releasing bond or other 52 29 like obligation. Where an order is entered for the recovery 52 30 of indemnifying property in kind or for the avoidance of an 52 31 indemnifying lien, upon application of any party in interest, 52 32 the court shall in the same proceeding ascertain the value of 52 33 the property or lien. If the value is less than the amount 52 34 for which the property is indemnified or less than the amount 52 35 of the lien, the transferee or lienholder may elect to retain 53 1 the property or lien upon payment of its value, as ascertained 53 2 by the court, to the liquidator within the time as fixed by 53 3 the court. 53 4 h. The liability of a surety under a releasing bond or 53 5 other like obligation is discharged to the extent of the value 53 6 of the indemnifying property recovered or the indemnifying 53 7 lien nullified and avoided by the liquidator. Where the 53 8 property is retained under paragraph "g", the liability of the 53 9 surety is discharged to the extent of the amount paid to the 53 10 liquidator. 53 11 i. If a creditor has been preferred for property which 53 12 becomes a part of the cemetery's estate, and afterward in good 53 13 faith gives the cemetery further credit without security of 53 14 any kind, the amount of the new credit remaining unpaid at the 53 15 time of the petition may be set off against the preference 53 16 which would otherwise be recoverable from the creditor. 53 17 j. If within four months before the filing of a successful 53 18 petition for liquidation under this chapter, or at any time in 53 19 contemplation of a proceeding to liquidate, a cemetery, 53 20 directly or indirectly, pays money or transfers property to an 53 21 attorney for services rendered or to be rendered, the 53 22 transaction may be examined by the court on its own motion or 53 23 shall be examined by the court on petition of the liquidator. 53 24 The payment or transfer shall be held valid only to the extent 53 25 of a reasonable amount to be determined by the court. The 53 26 excess may be recovered by the liquidator for the benefit of 53 27 the estate. However, where the attorney is in a position of 53 28 influence in the cemetery or an affiliate, payment of any 53 29 money or the transfer of any property to the attorney for 53 30 services rendered or to be rendered is governed by the 53 31 provision of paragraph "a", subparagraph (2), subparagraph 53 32 subdivision (d). 53 33 k. (1) An officer, manager, employee, shareholder, 53 34 subscriber, attorney, or any other person acting on behalf of 53 35 the cemetery who knowingly participates in giving any 54 1 preference when the person has reasonable cause to believe the 54 2 cemetery is or is about to become insolvent at the time of the 54 3 preference is personally liable to the liquidator for the 54 4 amount of the preference. There is an inference that 54 5 reasonable cause exists if the transfer was made within four 54 6 months before the date of filing of this successful petition 54 7 for liquidation. 54 8 (2) A person receiving property from the cemetery or the 54 9 benefit of the property of the cemetery as a preference 54 10 voidable under paragraph "a" is personally liable for the 54 11 property and shall account to the liquidator. 54 12 (3) This subsection shall not prejudice any other claim by 54 13 the liquidator against any person. 54 14 10. CLAIMS OF HOLDER OF VOID OR VOIDABLE RIGHTS. 54 15 a. A claim of a creditor who has received or acquired a 54 16 preference, lien, conveyance, transfer, assignment, or 54 17 encumbrance, voidable under this chapter shall not be allowed 54 18 unless the creditor surrenders the preference, lien, 54 19 conveyance, transfer, assignment, or encumbrance. If the 54 20 avoidance is effected by a proceeding in which a final 54 21 judgment has been entered, the claim shall not be allowed 54 22 unless the money is paid or the property is delivered to the 54 23 liquidator within thirty days from the date of the entering of 54 24 the final judgment. However, the court having jurisdiction 54 25 over the liquidation may allow further time if there is an 54 26 appeal or other continuation of the proceeding. 54 27 b. A claim allowable under paragraph "a" by reason of a 54 28 voluntary or involuntary avoidance, preference, lien, 54 29 conveyance, transfer, assignment, or encumbrance may be filed 54 30 as an excused late filing under subsection 12, if filed within 54 31 thirty days from the date of the avoidance or within the 54 32 further time allowed by the court under paragraph "a". 54 33 11. LIQUIDATOR'S PROPOSAL TO DISTRIBUTE ASSETS. 54 34 a. From time to time as assets become available, the 54 35 liquidator shall make application to the court for approval of 55 1 a proposal to disburse assets out of marshaled assets. 55 2 b. The proposal shall at least include provisions for all 55 3 of the following: 55 4 (1) Reserving amounts for the payment of all the 55 5 following: 55 6 (a) Expenses of administration. 55 7 (b) To the extent of the value of the security held, the 55 8 payment of claims of secured creditors. 55 9 (c) Claims falling within the priorities established in 55 10 subsection 18, paragraphs "a" and "b". 55 11 (2) Disbursement of the assets marshaled to date and 55 12 subsequent disbursement of assets as they become available. 55 13 c. Action on the application may be taken by the court 55 14 provided that the liquidator's proposal complies with 55 15 paragraph "b". 55 16 12. FILING OF CLAIMS. 55 17 a. Proof of all claims shall be filed with the liquidator 55 18 in the form required by subsection 13 on or before the last 55 19 day for filing specified in the notice required under 55 20 subsection 4. 55 21 b. The liquidator may permit a claimant making a late 55 22 filing to share in distributions, whether past or future, as 55 23 if the claimant were not late, to the extent that the payment 55 24 will not prejudice the orderly administration of the 55 25 liquidation under any of the following circumstances: 55 26 (1) The existence of the claim was not known to the 55 27 claimant and that the claimant filed the claim as promptly as 55 28 reasonably possible after learning of it. 55 29 (2) A transfer to a creditor was avoided under subsections 55 30 7 through 9, or was voluntarily surrendered under subsection 55 31 10, and that the filing satisfies the conditions of subsection 55 32 10. 55 33 (3) The valuation under subsection 17 of security held by 55 34 a secured creditor shows a deficiency, which is filed within 55 35 thirty days after the valuation. 56 1 c. The liquidator may consider any claim filed late and 56 2 permit the claimant to receive distributions which are 56 3 subsequently declared on any claims of the same or lower 56 4 priority if the payment does not prejudice the orderly 56 5 administration of the liquidation. The late-filing claimant 56 6 shall receive at each distribution the same percentage of the 56 7 amount allowed on the claim as is then being paid to claimants 56 8 of any lower priority. This shall continue until the claim 56 9 has been paid in full. 56 10 13. PROOF OF CLAIM. 56 11 a. Proof of claim shall consist of a statement signed by 56 12 the claimant that includes all of the following that are 56 13 applicable: 56 14 (1) The particulars of the claim including the 56 15 consideration given for it. 56 16 (2) The identity and amount of the security on the claim. 56 17 (3) The payments, if any, made on the debt. 56 18 (4) A statement that the sum claimed is justly owing and 56 19 that there is no setoff, counterclaim, or defense to the 56 20 claim. 56 21 (5) Any right of priority of payment or other specific 56 22 right asserted by the claimant. 56 23 (6) A copy of the written instrument which is the 56 24 foundation of the claim. 56 25 (7) The name and address of the claimant and the attorney 56 26 who represents the claimant, if any. 56 27 b. A claim need not be considered or allowed if it does 56 28 not contain all the information identified in paragraph "a" 56 29 which is applicable. The liquidator may require that a 56 30 prescribed form be used and may require that other information 56 31 and documents be included. 56 32 c. At any time the liquidator may request the claimant to 56 33 present information or evidence supplementary to that required 56 34 under paragraph "a" and may take testimony under oath, require 56 35 production of affidavits or depositions, or otherwise obtain 57 1 additional information or evidence. 57 2 d. A judgment or order against a cemetery entered after 57 3 the date of filing of a successful petition for liquidation, 57 4 or a judgment or order against the cemetery entered at any 57 5 time by default or by collusion need not be considered as 57 6 evidence of liability or of the amount of damages. A judgment 57 7 or order against a cemetery before the filing of the petition 57 8 need not be considered as evidence of liability or of the 57 9 amount of damages. 57 10 14. SPECIAL CLAIMS. 57 11 a. A claim may be allowed even if contingent, if it is 57 12 filed pursuant to subsection 12. The claim may be allowed and 57 13 the claimant may participate in all distributions declared 57 14 after it is filed to the extent that it does not prejudice the 57 15 orderly administration of the liquidation. 57 16 b. Claims that are due except for the passage of time 57 17 shall be treated as absolute claims are treated. However, the 57 18 claims may be discounted at the legal rate of interest. 57 19 c. Claims made under employment contracts by directors, 57 20 principal officers, or persons in fact performing similar 57 21 functions or having similar powers are limited to payment for 57 22 services rendered prior to the issuance of an order of 57 23 liquidation under subsection 2. 57 24 15. DISPUTED CLAIMS. 57 25 a. If a claim is denied in whole or in part by the 57 26 liquidator, written notice of the determination shall be given 57 27 to the claimant or the claimant's attorney by first class mail 57 28 at the address shown in the proof of claim. Within sixty days 57 29 from the mailing of the notice, the claimant may file 57 30 objections with the liquidator. Unless a filing is made, the 57 31 claimant shall not further object to the determination. 57 32 b. If objections are filed with the liquidator and the 57 33 liquidator does not alter the denial of the claim as a result 57 34 of the objections, the liquidator shall ask the court for a 57 35 hearing as soon as practicable and give notice of the hearing 58 1 by first class mail to the claimant or the claimant's attorney 58 2 and to any other persons directly affected. The notice shall 58 3 be given not less than ten nor more than thirty days before 58 4 the date of the hearing. The matter shall be heard by the 58 5 court or by a court-appointed referee. The referee shall 58 6 submit findings of fact along with a recommendation. 58 7 16. CLAIMS OF OTHER PERSON. If a creditor, whose claim 58 8 against a cemetery is secured in whole or in part by the 58 9 undertaking of another person, fails to prove and file that 58 10 claim, then the other person may do so in the creditor's name 58 11 and shall be subrogated to the rights of the creditor, whether 58 12 the claim has been filed by the creditor or by the other 58 13 person in the creditor's name to the extent that the other 58 14 person discharges the undertaking. However, in the absence of 58 15 an agreement with the creditor to the contrary, the other 58 16 person is not entitled to any distribution until the amount 58 17 paid to the creditor on the undertaking plus the distributions 58 18 paid on the claim from the cemetery's estate to the creditor 58 19 equal the amount of the entire claim of the creditor. An 58 20 excess received by the creditor shall be held by the creditor 58 21 in trust for the other person. 58 22 17. SECURED CREDITOR'S CLAIMS. 58 23 a. The value of security held by a secured creditor shall 58 24 be determined in one of the following ways, as the court may 58 25 direct: 58 26 (1) By converting the security into money according to the 58 27 terms of the agreement pursuant to which the security was 58 28 delivered to the creditors. 58 29 (2) By agreement, arbitration, compromise, or litigation 58 30 between the creditor and the liquidator. 58 31 b. The determination shall be under the supervision and 58 32 control of the court with due regard for the recommendation of 58 33 the liquidator. The amount determined shall be credited upon 58 34 the secured claim. A deficiency shall be treated as an 58 35 unsecured claim. If the claimant surrenders the security to 59 1 the liquidator, the entire claim shall be allowed as if 59 2 unsecured. 59 3 18. PRIORITY OF DISTRIBUTION. 59 4 The priority of distribution of claims from the cemetery's 59 5 estate shall be in accordance with the order in which each 59 6 class of claims is set forth. Claims in each class shall be 59 7 paid in full or adequate funds retained for the payment before 59 8 the members of the next class receive any payment. Subclasses 59 9 shall not be established within a class. The order of 59 10 distribution of claims is as follows: 59 11 a. CLASS 1. The costs and expenses of administration, 59 12 including but not limited to the following: 59 13 (1) The actual and necessary costs of preserving or 59 14 recovering the assets of the cemetery. 59 15 (2) Compensation for all authorized services rendered in 59 16 the liquidation. 59 17 (3) Necessary filing fees. 59 18 (4) The fees and mileage payable to witnesses. 59 19 (5) Authorized reasonable attorney's fees and other 59 20 professional services rendered in the liquidation. 59 21 b. CLASS 2. Reasonable compensation to employees for 59 22 services performed to the extent that they do not exceed two 59 23 months of monetary compensation and represent payment for 59 24 services performed within one year before the filing of the 59 25 petition for liquidation. Officers and directors are not 59 26 entitled to the benefit of this priority. The priority is in 59 27 lieu of other similar priority which may be authorized by law 59 28 as to wages or compensation of employees. 59 29 c. CLASS 3. Claims under interment rights contracts. 59 30 d. CLASS 4. Claims of general creditors. 59 31 e. CLASS 5. Claims of the federal or any state or local 59 32 government. Claims, including those of a governmental body 59 33 for a penalty or forfeiture, are allowed in this class only to 59 34 the extent of the pecuniary loss sustained from the act, 59 35 transaction, or proceeding out of which the penalty or 60 1 forfeiture arose, with reasonable and actual costs incurred. 60 2 The remainder of such claims shall be postponed to the class 60 3 of claims under paragraph "g". 60 4 f. CLASS 6. Claims filed late or any other claims other 60 5 than claims under paragraph "g". 60 6 g. CLASS 7. The claims of shareholders or other owners. 60 7 19. LIQUIDATOR'S RECOMMENDATIONS TO THE COURT. 60 8 a. The liquidator shall review claims duly filed in the 60 9 liquidation and shall make further investigation as necessary. 60 10 The liquidator may compound, compromise or in any other manner 60 11 negotiate the amount for which claims will be recommended to 60 12 the court except where the liquidator is required by law to 60 13 accept claims as settled by a person or organization. 60 14 Unresolved disputes shall be determined under subsection 15. 60 15 As soon as practicable, the liquidator shall present to the 60 16 court a report of the claims against the cemetery with the 60 17 liquidator's recommendations. The report shall include the 60 18 name and address of each claimant and the amount of the claim 60 19 finally recommended. 60 20 b. The court may approve, disapprove, or modify the report 60 21 on claims by the liquidator. Reports not modified by the 60 22 court within sixty days following submission by the liquidator 60 23 shall be treated by the liquidator as allowed claims, subject 60 24 to later modification or to rulings made by the court pursuant 60 25 to subsection 15. A claim under a policy of insurance shall 60 26 not be allowed for an amount in excess of the applicable 60 27 policy limits. 60 28 20. DISTRIBUTION OF ASSETS. Under the direction of the 60 29 court, the liquidator shall pay distributions in a manner that 60 30 will assure the proper recognition of priorities and a 60 31 reasonable balance between the expeditious completion of the 60 32 liquidation and the protection of unliquidated and 60 33 undetermined claims, including third-party claims. 60 34 Distribution of assets in kind may be made at valuations set 60 35 by agreement between the liquidator and the creditor and 61 1 approved by the court. 61 2 21. UNCLAIMED AND WITHHELD FUNDS. 61 3 a. Unclaimed funds subject to distribution remaining in 61 4 the liquidator's hands when the liquidator is ready to apply 61 5 to the court for discharge, including the amount distributable 61 6 to a creditor, owner, or other person who is unknown or cannot 61 7 be found, shall be deposited with the treasurer of state, and 61 8 shall be paid without interest, except as provided in 61 9 subsection 18, to the person entitled or the person's legal 61 10 representative upon proof satisfactory to the treasurer of 61 11 state of the right to the funds. An amount on deposit not 61 12 claimed within six years from the discharge of the liquidator 61 13 is deemed to have been abandoned and shall become the property 61 14 of the state without formal escheat proceedings and be 61 15 transferred to the insurance division regulatory fund. 61 16 b. Funds withheld under subsection 14 and not distributed 61 17 shall upon discharge of the liquidator be deposited with the 61 18 treasurer of state and paid pursuant to subsection 18. Sums 61 19 remaining which under subsection 18 would revert to the 61 20 undistributed assets of the cemetery shall be transferred to 61 21 the insurance division regulatory fund and become the property 61 22 of the state as provided under paragraph "a", unless the 61 23 commissioner in the commissioner's discretion petitions the 61 24 court to reopen the liquidation pursuant to subsection 23. 61 25 c. Notwithstanding any other provision of this chapter, 61 26 funds as identified in paragraph "a", with the approval of the 61 27 court, shall be made available to the commissioner for use in 61 28 the detection and prevention of future insolvencies. The 61 29 commissioner shall hold these funds in the insurance division 61 30 regulatory fund and shall pay without interest, except as 61 31 provided in subsection 18, to the person entitled to the funds 61 32 or the person's legal representative upon proof satisfactory 61 33 to the commissioner of the person's right to the funds. The 61 34 funds shall be held by the commissioner for a period of two 61 35 years at which time the rights and duties to the unclaimed 62 1 funds shall vest in the commissioner. 62 2 22. TERMINATION OF PROCEEDINGS. 62 3 a. When all assets justifying the expense of collection 62 4 and distribution have been collected and distributed under 62 5 this chapter, the liquidator shall apply to the court for 62 6 discharge. The court may grant the discharge and make any 62 7 other orders, including an order to transfer remaining funds 62 8 that are uneconomical to distribute, as appropriate. 62 9 b. Any other person may apply to the court at any time for 62 10 an order under paragraph "a". If the application is denied, 62 11 the applicant shall pay the costs and expenses of the 62 12 liquidator in resisting the application, including a 62 13 reasonable attorney's fee. 62 14 23. REOPENING LIQUIDATION. At any time after the 62 15 liquidation proceeding has been terminated and the liquidator 62 16 discharged, the commissioner or other interested party may 62 17 petition the court to reopen the proceedings for good cause 62 18 including the discovery of additional assets. The court shall 62 19 order the proceeding reopened if it is satisfied that there is 62 20 justification for the reopening. 62 21 24. DISPOSITION OF RECORDS DURING AND AFTER TERMINATION OF 62 22 LIQUIDATION. If it appears to the commissioner that the 62 23 records of a cemetery in process of liquidation or completely 62 24 liquidated are no longer useful, the commissioner may 62 25 recommend to the court and the court shall direct what records 62 26 shall be retained for future reference and what records shall 62 27 be destroyed. 62 28 25. EXTERNAL AUDIT OF RECEIVER'S BOOKS. The court may 62 29 order audits to be made of the books of the commissioner 62 30 relating to a receivership established under this chapter, and 62 31 a report of each audit shall be filed with the commissioner 62 32 and with the court. The books, records, and other documents 62 33 of the receivership shall be made available to the auditor at 62 34 any time without notice. The expense of an audit shall be 62 35 considered a cost of administration of the receivership. 63 1 26. TRANSFER TO GOVERNMENTAL SUBDIVISION. If the 63 2 liquidator is unable to sell the cemetery after one year, the 63 3 liquidator may vest title in an appropriate governmental 63 4 subdivision. The perpetual care guarantee fund, together with 63 5 all investments then outstanding, and all books, records, and 63 6 papers of the cemetery shall be transferred to the treasurer 63 7 of the governmental subdivision. The principal and interest 63 8 of the fund shall be used exclusively for the care and 63 9 maintenance of the cemetery. 63 10 Sec. 25. NEW SECTION. 523J.6 POWERS AND DUTIES OF 63 11 PERPETUAL CARE CEMETERIES. 63 12 1. Within the boundaries of the cemetery lands that the 63 13 cemetery owns, a cemetery may perform the following functions: 63 14 a. The exclusive care and maintenance of the cemetery. 63 15 b. The exclusive interment, entombment, or inurnment of 63 16 human remains, including the exclusive right to open, prepare 63 17 for interment, and close all ground, mausoleum, and urn 63 18 burials. Each preneed contract for burial rights or services 63 19 shall disclose, pursuant to the cemetery's bylaws, rules, and 63 20 regulations, whether opening and closing of the burial space 63 21 is included in the contract, and, if not, the current prices 63 22 for opening and closing and a statement that these prices are 63 23 subject to change. Each cemetery which sells preneed 63 24 contracts must offer opening and closing as part of a preneed 63 25 contract. 63 26 c. The exclusive initial preneed and at-need sale of 63 27 interment or burial rights in earth, mausoleum, crypt, niche, 63 28 or columbarium interment. However, this chapter does not 63 29 limit the right of a person owning interment or burial rights 63 30 to sell those rights to third parties subject to transfer of 63 31 title by the cemetery. 63 32 d. The adoption of bylaws regulating the activities 63 33 conducted within the cemetery's boundaries, provided that a 63 34 licensed funeral director shall not be denied access by any 63 35 cemetery to conduct a funeral for or supervise a disinterment 64 1 of human remains. The cemetery shall not approve any bylaw 64 2 which unreasonably restricts competition, or which 64 3 unreasonably increases the cost to the owner of interment or 64 4 burial rights in utilizing these rights. 64 5 e. The nonexclusive preneed and at-need sale of monuments, 64 6 memorials, markers, burial vaults, urns, flower vases, floral 64 7 arrangements, and other similar merchandise for use within the 64 8 cemetery. 64 9 f. The entry into sales or management contracts with other 64 10 persons. The cemetery shall be responsible for the deposit of 64 11 all moneys required to be placed in a trust fund. 64 12 2. A full disclosure shall be made of all fees required 64 13 for interment, entombment, or inurnment of human remains. 64 14 3. A cemetery may adopt bylaws establishing minimum 64 15 standards for burial merchandise or the installation of such 64 16 merchandise. 64 17 Sec. 26. NEW SECTION. 523J.7 INVESTIGATIONS. 64 18 The commissioner or the attorney general, for the purpose 64 19 of discovering violations of this chapter, may do any of the 64 20 following: 64 21 1. Investigate the cemetery and examine records as 64 22 necessary to verify compliance with this chapter. 64 23 2. Administer oaths and affirmations, subpoena witnesses, 64 24 receive evidence, and require the production of documents and 64 25 records in connection with an investigation or proceeding 64 26 being conducted pursuant to this chapter. 64 27 3. Apply to the district court for issuance of an order 64 28 requiring a person's appearance before the commissioner or 64 29 attorney general, or a designee of either or both, in cases 64 30 where the person has refused to obey a subpoena issued by the 64 31 commissioner or attorney general. The person may also be 64 32 required to produce documentary evidence germane to the 64 33 subject of the investigation. Failure to obey a court order 64 34 under this subsection constitutes contempt of court. 64 35 Sec. 27. Section 566A.1, subsection 1, Code 1995, is 65 1 amended to read as follows: 65 2 1. A corporation or other form of organization engaging in 65 3 the business of the ownership, maintenance, or operation of a 65 4 cemetery, which provides lots or other interment space for the 65 5 remains of human bodies is subject to this chapter. However, 65 6 achurch,religiousorganization, or established fraternal65 7societycemetery is subject only to subsection 2of this65 8section, and sections 566A.2A, 566A.2B, and 566A.2C. 65 9 Political subdivisions of the state are exempt fromthis65 10chaptersections 566A.3 and 566A.6. 65 11 Sec. 28. NEW SECTION. 566A.1A DEFINITIONS. 65 12 As used in this chapter, unless the context otherwise 65 13 requires: 65 14 1. "Agent" means a person authorized by a cemetery or a 65 15 cemetery operator to represent the cemetery in dealing with 65 16 the public. 65 17 2. "Cemetery" means a cemetery, mausoleum, columbarium, or 65 18 other space held for the purpose of burial, entombment, or 65 19 inurnment of human remains and where such space is offered for 65 20 sale to the public. 65 21 3. "Cemetery operator" means a person who owns, controls, 65 22 operates, or manages a cemetery, who is responsible for the 65 23 cemetery's care and maintenance, and who controls the opening 65 24 and closing of all graves, crypts, and niches. 65 25 4. "Columbarium" means a structure or room or other space 65 26 in a building or structure used or intended to be used for the 65 27 inurnment or deposit of cremated human remains. 65 28 5. "Commissioner" means the commissioner of insurance or 65 29 the deputy appointed under section 502.601. 65 30 6. "Deed" means the assignment or conveyance of interment 65 31 rights. 65 32 7. "Grave" means a piece of land that is used or intended 65 33 to be used for the underground burial of human remains, other 65 34 than an underground mausoleum or columbarium space. 65 35 8. "Human remains" means the body of a deceased individual 66 1 that is in any stage of decomposition or has been cremated. 66 2 9. "Interment" means the disposition of human remains by 66 3 earth burial, entombment, or inurnment. 66 4 10. "Interment rights" means a right of use conveyed by 66 5 contract or property ownership to inter human remains in a 66 6 columbarium, grave, mausoleum, lawn crypt, or undeveloped 66 7 space. 66 8 11. "Lawn crypt" means an outer enclosure, for a casket or 66 9 similar inner burial container which is permanently installed 66 10 below ground prior to the time of actual interment. A lawn 66 11 crypt may permit single or multiple interments in a grave 66 12 space. 66 13 12. "Mausoleum" means a building, structure, or part of a 66 14 building or structure that is used or intended to be used for 66 15 the entombment of human remains. 66 16 13. "Mausoleum space" means a niche, crypt, or specific 66 17 place in a mausoleum that contains or is intended to contain 66 18 human remains. 66 19 14. "Niche" means a recess in the wall of a mausoleum or 66 20 columbarium for the deposit of human remains. 66 21 15. "Perpetual care" means maintenance, repair, and care 66 22 of all interment spaces, features, buildings, roadways, 66 23 parking lots, water supply, and other existing cemetery 66 24 structures subject to the provisions of section 566A.3 and 66 25 includes the general overhead expenses needed to accomplish 66 26 such maintenance, repair, and care. 66 27 16. "Perpetual care cemetery" means a cemetery which has 66 28 established a perpetual care fund for the maintenance, repair, 66 29 and care of all interment spaces subject to perpetual care 66 30 within the cemetery in compliance with section 566A.3. 66 31 17. "Religious cemetery" means a cemetery that is owned, 66 32 operated, or controlled by a recognized church, religious 66 33 society, association, or denomination. 66 34 18. "Sale" means a transfer for consideration of any 66 35 interest in ownership, title, or right of use. 67 1 19. "Undeveloped space" means a mausoleum, columbarium 67 2 space, or lawn crypt that is not ready for the burial of human 67 3 remains on the date of the sale of the space. 67 4 Sec. 29. NEW SECTION. 566A.2A PERPETUAL CARE CEMETERY 67 5 REGISTRY. 67 6 A perpetual care cemetery shall maintain a registry of 67 7 individuals who have purchased items subject to the perpetual 67 8 care requirements of this chapter including the amount 67 9 deposited in trust for each individual. The registry shall 67 10 include all transactions entered into on or after July 1, 67 11 1995. 67 12 Sec. 30. NEW SECTION. 566A.2B INTERMENT RIGHTS AGREEMENT 67 13 &endash; REQUIREMENTS &endash; CONTENTS. 67 14 1. An agreement for interment rights under this chapter 67 15 must be written in clear, understandable language and do all 67 16 of the following: 67 17 a. Identify the seller and purchaser. 67 18 b. Identify the salesperson. 67 19 c. Specify the interment rights to be provided and the 67 20 cost of each item. 67 21 d. State clearly the conditions on which substitution will 67 22 be allowed. 67 23 e. Set forth the total purchase price and the terms under 67 24 which it is to be paid. 67 25 f. State clearly whether the agreement is a revocable or 67 26 irrevocable contract, and, if revocable, which parties have 67 27 the authority to revoke the agreement. 67 28 g. State the amount or percentage of money to be placed in 67 29 the cemetery's perpetual care and maintenance guarantee fund. 67 30 h. Set forth an explanation that the perpetual care and 67 31 maintenance guarantee fund is an irrevocable trust, that 67 32 deposits cannot be withdrawn even in the event of 67 33 cancellation, and that the trust's income shall be used by the 67 34 cemetery for its maintenance, repair, and care. 67 35 i. Set forth an explanation of any fees or expenses that 68 1 may be charged. 68 2 j. Set forth an explanation of whether amounts for 68 3 perpetual care will be deposited in trust upon payment in full 68 4 or on an allocable basis as payments are made. 68 5 k. Set forth an explanation of whether initial payments on 68 6 agreements for multiple items of funeral and cemetery 68 7 merchandise or services, or both, will be allocated first to 68 8 the purchase of a grave, niche, columbarium space, or 68 9 mausoleum space. If such an allocation is to be made, the 68 10 agreement shall provide for the immediate transfer of such 68 11 interment rights upon payment in full and prominently state 68 12 that any applicable trust deposits under chapters 523A and 68 13 523E will not be made until the cemetery has received payment 68 14 in full for the interment rights. The transfer of an 68 15 undeveloped space may be deferred until such space is ready 68 16 for burial. 68 17 l. If the transfer of an undeveloped space will be 68 18 deferred until the space is ready for burial as permitted in 68 19 paragraph "k", the agreement shall provide for some form of 68 20 written acknowledgment upon payment in full, specify a 68 21 reasonable time period for development of the space, describe 68 22 what happens in the event of a death prior to development of 68 23 the space, and provide for the immediate transfer of the 68 24 interment rights when development of the space is complete. 68 25 m. Specify the purchaser's right to cancel and the damages 68 26 payable for cancellation, if any. 68 27 n. State the name and address of the commissioner. 68 28 Sec. 31. NEW SECTION. 566A.2C ANNUAL REPORT BY RELIGIOUS 68 29 CEMETERIES. 68 30 1. A religious cemetery shall file a written report with 68 31 the insurance division annually within four months following 68 32 the end of the cemetery's fiscal year. The report shall 68 33 include all of the following: 68 34 a. The name and address of the cemetery. 68 35 b. An affidavit that the cemetery is a religious cemetery. 69 1 c. Copies of all sales agreement forms used by the 69 2 cemetery. 69 3 2. The commissioner shall permit the filing of a unified 69 4 annual report in the event of commonly owned or affiliated 69 5 cemeteries. A religious organization may commingle perpetual 69 6 care funds for purposes of investment and administration and 69 7 may file a single report by diocese or similar region, if each 69 8 cemetery is appropriately identified and separate records are 69 9 maintained for each cemetery. 69 10 3. The report shall be made under oath and shall be 69 11 accompanied by a filing fee of one hundred dollars. The fee 69 12 shall be waived for a cemetery with less than two thousand 69 13 five hundred dollars average annual retail sales for the 69 14 previous three calendar years. 69 15 4. Notwithstanding chapter 22, all records maintained by 69 16 the commissioner under this section are confidential and shall 69 17 not be made available for inspection or copying except upon 69 18 the approval of the commissioner or attorney general. 69 19 Sec. 32. NEW SECTION. 566A.2D ANNUAL REPORT BY 69 20 NONPERPETUAL CARE CEMETERIES. 69 21 1. A nonperpetual care cemetery shall file a written 69 22 report with the insurance division within four months 69 23 following the end of the cemetery's fiscal year. The report 69 24 shall include all of the following: 69 25 a. The name and address of the cemetery. 69 26 b. An affidavit that the cemetery is a nonperpetual care 69 27 cemetery in compliance with section 566A.5. 69 28 c. Copies of all sales agreement forms used by the 69 29 cemetery. 69 30 2. The commissioner shall permit the filing of a unified 69 31 annual report in the event of commonly owned or affiliated 69 32 cemeteries. A political subdivision may commingle perpetual 69 33 care funds for purposes of investment and administration and 69 34 may file a single report, if each cemetery is appropriately 69 35 identified and separate records are maintained for each 70 1 cemetery. 70 2 3. The report shall be made under oath and shall be 70 3 accompanied by a filing fee of one hundred dollars for a 70 4 cemetery with average retail sales equal to or greater than 70 5 two thousand five hundred dollars for the previous three 70 6 calendar years. The fee shall be waived for a cemetery with 70 7 less than two thousand five hundred dollars average annual 70 8 retail sales for the previous three calendar years. 70 9 4. Notwithstanding chapter 22, all records maintained by 70 10 the commissioner under this section are confidential and shall 70 11 not be made available for inspection or copying except upon 70 12 the approval of the commissioner or attorney general. 70 13 Sec. 33. NEW SECTION. 566A.2E ANNUAL REPORT BY PERPETUAL 70 14 CARE CEMETERIES. 70 15 1. A perpetual care cemetery shall file a written report 70 16 as of the end of each fiscal year of the cemetery including 70 17 the following: 70 18 a. The name and address of the cemetery. 70 19 b. The name and address of any trustee holding perpetual 70 20 care and maintenance guarantee fund moneys. 70 21 c. The name and address of any depository holding 70 22 perpetual care and maintenance guarantee fund moneys. 70 23 d. An affidavit that the cemetery is a perpetual care 70 24 cemetery in compliance with section 566A.3. 70 25 e. Copies of all sales agreement forms used by the 70 26 cemetery. 70 27 f. The amount of the principal of the cemetery's perpetual 70 28 care funds at the end of the fiscal year. 70 29 g. The number of interments made and the number of deeds 70 30 issued during the cemetery's preceding fiscal year. 70 31 2. The report shall be filed with the insurance division 70 32 within four months following the end of the cemetery's fiscal 70 33 year in the form required by the commissioner. 70 34 3. The commissioner shall permit the filing of a unified 70 35 annual report in the event of commonly owned or affiliated 71 1 cemeteries. A political subdivision may commingle perpetual 71 2 care funds for purposes of investment and administration and 71 3 may file a single report, if each cemetery is appropriately 71 4 identified and separate records are maintained for each 71 5 cemetery. 71 6 4. The commissioner shall establish by rule an audit fee 71 7 to be filed with the annual report. The audit report fee 71 8 shall be based on the number of deeds issued by the cemetery 71 9 during the reporting period. The audit fee shall apply only 71 10 to perpetual care cemeteries and shall be based on the 71 11 approximate cost of regulation. 71 12 5. Notwithstanding chapter 22, all records maintained by 71 13 the commissioner under this subsection are confidential and 71 14 shall not be made available for inspection or copying except 71 15 upon approval of the commissioner or attorney general. 71 16 Sec. 34. Section 566A.3, Code 1995, is amended by adding 71 17 the following new unnumbered paragraph: 71 18 NEW UNNUMBERED PARAGRAPH. A perpetual care cemetery may 71 19 require a contribution to the cemetery's perpetual care 71 20 guarantee fund for each grave marker, tombstone, monument, or 71 21 item of ornamental merchandise installed in the cemetery from 71 22 the purchaser of such merchandise. A cemetery may establish a 71 23 separate perpetual care fund for this purpose. The 71 24 contribution, if required by the cemetery, shall be uniformly 71 25 charged on every installation and shall be set aside and 71 26 deposited in the perpetual care trust fund. The contributions 71 27 shall be nonrefundable and shall not be withdrawn from the 71 28 trust fund once deposited. 71 29 Sec. 35. Section 566A.5, Code 1995, is amended by striking 71 30 the section and inserting in lieu thereof the following: 71 31 566A.5 NONPERPETUAL CARE CEMETERIES. 71 32 1. All other organizations subject to the provisions of 71 33 this chapter shall be nonperpetual care cemeteries. 71 34 2. Each nonperpetual care cemetery shall post a legible 71 35 sign in a conspicuous place in the office or offices where 72 1 sales are conducted, and at or near the entrance of the 72 2 cemetery or its administration building and readily accessible 72 3 to the public stating: "This is a nonperpetual care 72 4 cemetery". The lettering of these signs shall be of a size 72 5 and style as approved by the commissioner by rule or order so 72 6 that the signs can be read at a reasonable distance. 72 7 3. Each nonperpetual care cemetery shall also have printed 72 8 or stamped at the head of all of its contracts, deeds, 72 9 statements, letterheads, and advertising material, the legend: 72 10 "This is a nonperpetual care cemetery", and shall not sell any 72 11 lot or interment space in the cemetery unless the purchaser of 72 12 the lot or interment space is informed that the cemetery is a 72 13 nonperpetual care cemetery. 72 14 4. A nonperpetual care cemetery or cemetery operator or 72 15 employee or agent of a nonperpetual care cemetery shall not 72 16 advertise or represent that the cemetery is a perpetual care 72 17 cemetery or use any similar title, description, or term 72 18 indicating that the cemetery provides guaranteed or permanent 72 19 maintenance and care or that the cemetery has a trust fund or 72 20 endowment fund to pay for the expenses of such care. 72 21 Sec. 36. Section 566A.12, Code 1995, is amended by 72 22 striking the section and inserting in lieu thereof the 72 23 following: 72 24 566A.12 ANNUAL REPORTS AND ADMINISTRATION. 72 25 1. CEMETERY REGISTRY. The commissioner shall establish 72 26 and maintain a public registry of cemeteries that indicates 72 27 whether a cemetery is a perpetual care cemetery or a 72 28 nonperpetual care cemetery. 72 29 2. INVESTIGATIONS AND AUDITS. The commissioner or the 72 30 attorney general, for the purpose of discovering violations of 72 31 this chapter or rules adopted pursuant to this chapter, may do 72 32 any of the following: 72 33 a. Audit any cemetery, for cause or on a random basis, to 72 34 determine compliance with this chapter. A cemetery shall make 72 35 available to the commissioner or attorney general the 73 1 cemetery's deed registry and those books, accounts, records, 73 2 and files related to the sale of interment rights. 73 3 Notwithstanding chapter 22, all business records and files 73 4 acquired by the commissioner or attorney general pursuant to 73 5 an audit under this subsection are confidential and shall not 73 6 be made available for inspection or copying unless ordered by 73 7 a court for good cause shown. If it is determined pursuant to 73 8 an audit that a material violation of this chapter or rules 73 9 adopted pursuant to this chapter has occurred, the cost of the 73 10 audit may be assessed to the cemetery. 73 11 b. Administer oaths and affirmations, subpoena witnesses, 73 12 receive evidence, and require the production of documents and 73 13 records in connection with an investigation or proceeding 73 14 being conducted pursuant to this chapter. 73 15 c. Apply to the district court for issuance of an order 73 16 requiring a person's appearance before the commissioner or 73 17 attorney general, or a designee of either or both, where the 73 18 person has refused to obey a subpoena issued by the 73 19 commissioner or attorney general. The person may also be 73 20 required to produce documentary evidence germane to the 73 21 subject of the investigation. Failure to obey a court order 73 22 under this subsection constitutes contempt of court. 73 23 3. CEASE AND DESIST ORDERS. If an audit or investigation 73 24 provides reasonable evidence that a person has violated this 73 25 chapter, or any rule adopted pursuant to this chapter, the 73 26 commissioner may issue an order directed at the person to 73 27 cease and desist from engaging in such act or practice. 73 28 4. RECEIVERSHIPS. 73 29 a. The commissioner shall notify the attorney general if 73 30 the commissioner finds that a perpetual care cemetery subject 73 31 to regulation under this chapter meets one or more of the 73 32 following grounds for the establishment of a receivership: 73 33 (1) Is insolvent. 73 34 (2) Has utilized trust funds for personal or business 73 35 purposes in a manner inconsistent with the requirements of 74 1 this chapter, and the amount of funds currently held in the 74 2 trust is less than the amount required by this chapter. 74 3 b. The attorney general may apply to the district court in 74 4 any county of the state for a receivership. Upon proof of any 74 5 of the grounds for a receivership described in this section 74 6 the court may grant a receivership. 74 7 5. INJUNCTIONS. The attorney general may apply to the 74 8 district court for an injunction to restrain any cemetery 74 9 subject to this chapter and any agents, employees, trustees, 74 10 or associates of the cemetery from engaging in conduct or 74 11 practices deemed a violation of this chapter or rules adopted 74 12 pursuant to this chapter. Upon proof of any violation of this 74 13 chapter described in the petition for injunction, the court 74 14 may grant the injunction. Failure to obey a court order under 74 15 this subsection constitutes contempt of court. 74 16 Sec. 37. Section 566A.13, Code 1995, is amended to read as 74 17 follows: 74 18 566A.13 VIOLATIONS AND PENALTIES. 74 19 A violation of this chapter or rules adopted by the 74 20attorney generalcommissioner pursuant to this chapter is a 74 21 violation of section 714.16, subsection 2, paragraph "a". The 74 22 remedies and penalties provided by section 714.16, including 74 23 but not limited to, provisions relating to injunctive relief 74 24 and penalties, apply to a violation of this chapter. 74 25 Sec. 38. NEW SECTION. 566A.14 RULES. 74 26 The division of insurance may adopt rules pursuant to 74 27 chapter 17A as necessary and appropriate to administer this 74 28 chapter. 74 29 Sec. 39. NEW SECTION. 566A.15 CEMETERY FUND. 74 30 A special revenue fund is created in the state treasury, 74 31 under the control of the commissioner, to be known as the 74 32 insurance division cemetery fund. Commencing July 1, 1995, 74 33 filing fees received pursuant to sections 566A.2C and 566A.2D 74 34 and one dollar from the audit fee for each deed reported on 74 35 the annual report required by section 566A.2E, executed during 75 1 the preceding fiscal year, shall be deposited in the insurance 75 2 division cemetery fund by the commissioner. However, if the 75 3 balance of the fund on July 1 of any year exceeds two hundred 75 4 thousand dollars, the allocation to the fund shall not be 75 5 made, and the total sum of the fees paid pursuant to sections 75 6 566A.2C, 566A.2D, and 566A.2E shall be deposited in the 75 7 general fund of the state. Notwithstanding section 8.33, 75 8 moneys in the fund shall not revert to the general fund but 75 9 shall remain in the cemetery fund. Moneys in the cemetery 75 10 fund are appropriated to the insurance division and, subject 75 11 to authorization by the commissioner, may be used to pay the 75 12 expenses of that office incurred in the administration of the 75 13 audit, investigative, and enforcement duties and obligations 75 14 imposed under this chapter, and the expenses of receiverships 75 15 established pursuant to section 566A.12. 75 16 Sec. 40. CONDITION TO ENACTMENT OF CERTAIN PROVISIONS. 75 17 The section of this Act which amends Code section 566A.12 75 18 shall only be implemented if the general assembly makes an 75 19 appropriation of at least fifty thousand dollars and provides 75 20 for the employment of one full-time employee devoted to the 75 21 insurance division for the implementation of this Act. 75 22 EXPLANATION 75 23 This bill amends chapter 523A, which applies to funeral 75 24 services and merchandise, and chapter 523E, which applies to 75 25 cemetery merchandise, and creates a new chapter 523J, which 75 26 applies to cemeteries. 75 27 Section 523A.1 is amended to except caskets and other types 75 28 of inner burial containers or concrete burial vaults sold 75 29 after July 1, 1995, from language in that section which 75 30 defines when a delivery to a purchaser is made. The section 75 31 is amended to authorize the commissioner to adopt rules to 75 32 prohibit the commingling of trust funds with other funds of 75 33 the seller. The section is is also amended to provide that an 75 34 agreement may be funded by insurance proceeds in lieu of a 75 35 trust fund if the payments are made directly to the insurance 76 1 company by the purchaser of the agreement. 76 2 Section 523A.2, subsection 1, is amended to require that 76 3 the balance of each trust account of the seller be reported 76 4 annually to the insurance commissioner, along with the 76 5 identity of the purchaser or beneficiary. 76 6 Section 523A.2, subsection 7 is amended to provide that 76 7 chapter 523A does not prohibit generally the funding of 76 8 agreements by insurance proceeds. Currently the section is 76 9 limited to agreements. 76 10 Section 523A.8, subsection 1, is amended to require certain 76 11 disclosures in an agreement for the sale of funeral services 76 12 and merchandise. 76 13 Section 523A.8 is amended by adding two new subsections 76 14 which authorize the insurance commissioner to adopt rules 76 15 establishing disclosure and format requirements to promote 76 16 consumer understanding of the merchandise and services 76 17 purchased under an agreement, and which identify certain 76 18 information to be disclosed by an individual prior to 76 19 accepting an applicant's initial premium or deposit for a 76 20 preneed funeral contract or prearrangement. 76 21 Section 523A.20 is amended to increase the amount allocated 76 22 from fees paid by sellers of funeral services and merchandise 76 23 to the insurance division regulatory fund from $1 to $2. The 76 24 section is also amended to decrease the fee to be assessed 76 25 establishment permit holders for each agreement reported on 76 26 the permit holder's annual report from $5 to $2. The $5 fee 76 27 on establishment holders is authorized for assessment on May 1 76 28 of 1994 and 1995. The $2 fee is to be assessed on May 1 of 76 29 1996 and 1997. The fee is to be used to fund consumer 76 30 education, audits, investigations, payments under contract 76 31 with licensed establishments to provide funeral and cemetery 76 32 merchandise or services in the event of statutory 76 33 noncompliance by the initial seller, liquidations, and 76 34 receiverships. 76 35 New section 523A.21 is created and provides that upon a 77 1 determination by the commissioner that grounds exist for an 77 2 administrative license revocation or suspension action by the 77 3 board of mortuary science examiners, the commissioner may 77 4 forward the grounds for the determination to that board. 77 5 New section 523A.22 establishes the process for the 77 6 liquidation of a funeral establishment which is found to be 77 7 insolvent or in such condition that the further transaction of 77 8 business would be hazardous, financially or otherwise, to its 77 9 preneed funeral customers or the public. The procedure 77 10 established is similar to the procedure established for the 77 11 liquidation of insurance companies. 77 12 Section 523E.1 is amended to authorize the commissioner to 77 13 adopt rules to prohibit the commingling of trust funds with 77 14 other funds of the seller of cemetery merchandise. The 77 15 section is also amended to provide that an agreement may be 77 16 funded by insurance proceeds in lieu of a trust fund if the 77 17 payments are made directly to the insurance company by the 77 18 purchaser of the agreement. 77 19 Section 523E.2, subsection 1, is amended to require that 77 20 the balance of each trust account of the seller be reported 77 21 annually to the insurance commissioner, along with the 77 22 identity of the purchaser or beneficiary. 77 23 Section 523E.8, subsection 1, is amended to require certain 77 24 disclosures in an agreement for the sale of funeral services 77 25 and merchandise. 77 26 Section 523E.8 is amended by adding two new subsections 77 27 which authorize the insurance commissioner to adopt rules 77 28 establishing disclosure and format requirements to promote 77 29 consumer understanding of the cemetery merchandise purchased 77 30 under an agreement, and which identify certain information to 77 31 be disclosed by an individual prior to accepting an 77 32 applicant's initial premium or deposit for a preneed funeral 77 33 contract or prearrangement. 77 34 Section 523E.20 is amended to increase the amount allocated 77 35 from fees paid by sellers of funeral services and merchandise 78 1 to the insurance division regulatory fund from one dollar to 78 2 two dollars. The section is also amended to decrease the fee 78 3 to be assessed establishment permit holders for each agreement 78 4 reported on the permit holder's annual report from $5 to $2. 78 5 The $5 fee on establishment holders is authorized for 78 6 assessment on May 1 of 1994 and 1995. The $2 fee is to be 78 7 assessed on May 1 of 1996 and 1997. The fee is to be used to 78 8 fund consumer education, audits, investigations, payments 78 9 under contract with licensed establishments to provide funeral 78 10 and cemetery merchandise or services in the event of statutory 78 11 noncompliance by the initial seller, liquidations, and 78 12 receiverships. 78 13 New section 523E.21 is created and provides that upon a 78 14 determination by the commissioner that grounds exist for an 78 15 administrative license revocation or suspension action by the 78 16 board of mortuary science examiners, the commissioner may 78 17 forward the grounds for the determination to that board. 78 18 New section 523J.1 is created and establishes the 78 19 definitions of terms used in the chapter including "abandoned 78 20 cemetery", "cemetery", "commissioner", "interment rights", and 78 21 "perpetual care cemetery". 78 22 New section 523J.2 is created and provides that cemeteries 78 23 organized or commencing business in this state on or after 78 24 July 1, 1995, are to operate as perpetual care cemeteries. 78 25 New section 523J.3 is created and provides that a perpetual 78 26 care cemetery is not to offer interment rights to the public 78 27 without a permit pursuant to chapter 523J. 78 28 New section 523J.4 is created and provides that the 78 29 commissioner may deny, suspend, or revoke a permit issued 78 30 under chapter 523J upon a finding that the owner of a cemetery 78 31 has committed a fraudulent practice or been convicted of a 78 32 felony related to the sale of interment rights or the sale of 78 33 funeral services, funeral merchandise, or cemetery 78 34 merchandise, or the cemetery's trust assets, warehoused 78 35 merchandise, surety bonds, or insurance funding are in 79 1 material noncompliance with applicable statutory provisions. 79 2 New section 523J.5 is created and establishes the process 79 3 for the liquidation of a funeral establishment which is found 79 4 to be insolvent or in such condition that the further 79 5 transaction of business would be hazardous, financially or 79 6 otherwise, to its customers or the public. The procedure 79 7 established is similar to the procedure established for the 79 8 liquidation of insurance companies. 79 9 New section 523J.6 is created and establishes the powers 79 10 and duties of a perpetual care cemetery. 79 11 New section 523J.7 is created and provides that the 79 12 insurance commissioner or the attorney general may investigate 79 13 a perpetual care cemetery to verify compliance with chapter 79 14 523J. 79 15 Section 566A.1 is amended to provide that a fraternal 79 16 society is subject to the provisions of chapter 566A and that 79 17 a political subdivision is subject to the chapter except for 79 18 sections 566A.3 and 566A.6. 79 19 New section 566A.1A is created establishing the definitions 79 20 for chapter 566A. 79 21 New section 566A.2A is created which requires perpetual 79 22 care cemeteries to maintain a registry of individuals 79 23 purchasing items subject to perpetual care. 79 24 New section 566A.2B is created and requires an agreement 79 25 for interment rights to be written in clear, understandable 79 26 language. The section also sets forth the contents of the 79 27 agreement. 79 28 New section 566A.2C is created and requires a religious 79 29 cemetery to file a written report with the insurance division 79 30 annually. The report is to be accompanied by a filing fee of 79 31 $100. 79 32 New section 566A.2D is created and requires a nonperpetual 79 33 care cemetery to file a written report with the insurance 79 34 division annually. The report is to be accompanied by a 79 35 filing fee of $100. 80 1 New section 566A.2E is created and requires a perpetual 80 2 care cemetery to file a written report with the insurance 80 3 division annually. The commissioner is to establish an audit 80 4 fee by rule to be filed with the annual report. 80 5 Section 566A.3 is amended to permit a perpetual care 80 6 cemetery to require a contribution to the cemetery's perpetual 80 7 care guarantee fund for each grave marker, tombstone, 80 8 monument, or item of ornamental merchandise installed or 80 9 placed in the cemetery. 80 10 Section 566A.5, which relates to nonperpetual care 80 11 cemeteries, is substantially rewritten and provides that a 80 12 legible sign must be posted indicating that the cemetery is a 80 13 nonperpetual care cemetery; requires such indication to be 80 14 included on the cemetery's contracts, deeds, statements, 80 15 letterhead, and advertising material; and prohibits the 80 16 cemetery from advertising as a perpetual care cemetery. 80 17 Section 566A.12, relating to perpetual care cemetery 80 18 records, is struck, is rewritten, and provides for a cemetery 80 19 registry to be established by the insurance commissioner, 80 20 annual reports to be filed concerning the number of interments 80 21 made and the amount of the principal of the cemetery's 80 22 perpetual care funds, investigations and audits of cemeteries 80 23 by the insurance commissioner or the attorney general, and 80 24 certain regulatory powers. 80 25 Section 566A.13, relating to penalties, reflects that rules 80 26 will be adopted pursuant to the chapter by the insurance 80 27 commissioner and not the attorney general. 80 28 New section 566A.14 is created and authorizes the division 80 29 of insurance to adopt rules as necessary for the 80 30 administration of chapter 566A. 80 31 New section 566A.15 is created and establishes the 80 32 insurance division cemetery fund. 80 33 Section 33 of the bill conditions the implementation of 80 34 566A.12, as rewritten, upon an appropriation to the insurance 80 35 division of $50,000 and one full-time equivalent position. 81 1 This bill may create a state mandate as defined in chapter 81 2 25B. 81 3 LSB 1712SV 76 81 4 mj/cf/24.1
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