2. (§15.18) Distinguishable From Collateral Posted With Division
The money in the insolvency fund is used to pay the covered claims of the insolvent or bankrupt self-insured member employer and is distinguishable from the collateral or security that the self-insured employer posts with the Division as a condition of being granted self-insurance authority under § 287.280, RSMo Supp. 2018, and 8 C.S.R. 50-3.010. The case that illustrates the importance of a state agency holding the necessary collateral is Prime Tanning Corporation. The Division granted self-insurance authority to Prime Tanning Corporation from 1985 to 2009. Prime Tanning Corporation secured its workers’ compensation obligations by posting a surety bond issued by Acstar. The bond enures to the benefit of the claimants for the payment of the workers’ compensation obligations that arose or should arise during the self-insurance period. On November 16, 2010, Prime Tanning Corporation, Prime Tanning Co., Inc., and Irving Tanning Co. filed a Voluntary Petition for Relief under Chapter 11 of the United States Bankruptcy Code, 11 U.S.C. §§ 101 et seq., in the United States Bankruptcy Court District of Maine, In re Irving Tanning Co., No. 10–11757–LHK, 2012 WL 3744954 (Bankr. D. Me. Aug. 28, 2012) (jointly administered). Because of Prime Tanning Corporation’s default, the Division demanded the surety, Acstar, to turn over the security proceeds. Acstar, a third party who is obligated to pay the security proceeds under state law, refused.
Meanwhile, on motion of the debtor, the bankruptcy court established a...
