Insurance Company in Liquidation
 
fwic red logo.png

 

SURETY BONDS - CLAIMS

Frequently Asked Questions

 

Question:    Can I file a claim against a Far West bond?

 

Answer:      Yes.   You may still file claims against a Far West bond that was in force at the time of the liquidation order. Please note, the bar date (last day to file a timely Proof of Claim) was September 30, 2002.  Far West will however continue to accept any and all claims filed on the prescribed Proof of Claim form, but they will be considered late. You will need to comply with all substantive and procedural requirements to submit a claim as if there was no liquidation of Far West.  All claims should be sent to the Far West Insurance Company address.

 

Question:     Does the cancellation of all Far West’s bonds affect my ability to make a claim?

 

Answer:    No.  As of December 9, 2001, all Far West bonds were cancelled.  However, the cancellation of the Far West bonds does not impact your right to make a claim.

 

Question:    If I have already filed a claim against a Far West bond, will I have to re-file my claim?

 

Answer: Yes.  You may have received a Proof of Claim (POC) form for filing claims. If you need a POC form, please request one from Far West (see “How to Reach Us” on the Home page).  Although you may have already submitted a Far West Proof of Claim form and/or other documents supporting your claim prior to the Liquidation Order, you will be required to submit this new POC form approved by the Liquidator in order to be considered to share in any distribution of assets from the estate of Far West Insurance Company.  A timely filed POC form must have been received or postmarked by 5:00 P.M. Central Daylight Savings Time on September 30, 2002 (bar date) in order for the claim to have been accepted as timely filed.  Far West will continue to accept any and all claims filed on the prescribed Far West in Liquidation Proof of Claim form, however all POCs received after the bar date (postmarked after September 30, 2002) will be considered late.

 

Question:     Will my claim continue to be investigated?

 

Answer:    Yes.  Horizon Business Resources Inc. (Horizon) on behalf of the Liquidator, will adjust all of Far West’s POC’s. Even though all litigation and non-litigation matters have been stayed, the Liquidator has instructed Horizon to continue to investigate claims to determine each claim’s validity and value.  Therefore, a Horizon claims representative will continue to investigate your claim. (For contact information regarding Horizon Business Resources Inc., see   “How to Reach Us” on the Home Page of this Website.)

 

Question:    Will I receive the full value of my claim after the bar date?

 

Answer: This is unknown.  After Horizon has had an opportunity to investigate your claim and determine its validity and value, Horizon will make a recommendation of value to the Liquidator.  After September 30, 2002, the Liquidator will aggregate the value of all claims against the Far West estate.  Until then, we will not be in a position to advise you how much of your claim you may actually receive, since the Liquidator must have an opportunity to assess the estimated value of all claims, and determine the value of the assets of the Far West estate.

 

Question:  What happens if I received a claim payment prior to the liquidation and the check was returned by the bank?

 

Answer:    Upon the liquidation, all of Far West’s bank accounts were closed by the Liquidator, and checks presented for payment subsequent were not honored.  You should include this claim as part of your POC filing. 

 

Question:  Will the Liquidator pay claims from any bond specific collateral that has been deposited with Far West?

 

Answer:     Generally, no.  Until the proof of claim process is complete, the exposure on a bond may not be known.  On a case-by-case basis, the Liquidator can satisfy undisputed claims, where there is full cash collateral (or equivalent) to pay the claim and payment of the claim will result in a release of the surety from all parties who could claim against the bond and full exoneration of the bond.

 

Question:    Can my claim be paid from any other sources such as available contract funds?

 

Answer:      Under certain circumstances, for example in a contract bond situation, if the owner is holding contract funds and is willing to pay those contract funds directly to unpaid subcontractors and suppliers, the Liquidator may approve such payments.  Please contact Far West to discuss these unique situations. 

 

Question:    What happens to a claim where there is a reinsurance endorsement or co-surety?

 

Answer: Please return to the Surety Bond Menu and click on Co-Surety/Reinsurance Endorsements. 

 

Question:    Where does a claimant obtain the proof of claim form?

 

Answer:      The Proof of Claim forms were forwarded by October 22, 2001 to all persons with known claims or reasonably expected to have claims against Far West Insurance Company.  Proof of Claim (POC) forms can be requested from Far West (see “How to Reach Us” on the Home page).  Note that you cannot obtain the Proof of Claim form from the offices of the Nebraska Department of Insurance.

 

Question:   If a Claimant completes and submits a proof of claim, does this mean the claim is approved?

 

Answer:     No. At some point the Claimant will receive the Liquidator’s preliminary recommendation.  If no objections are received, the amount recommended will be submitted with other recommendations for Court approval.  The claim recommendations may be for the amount claimed, the claim may be denied in full, or an independent quantification of the loss may be recommended.

 

 

Question: How much will each Claimant receive?

 

Answer:      Assets will be distributed from the Far West estate in the order of priority set forth in Nebraska Revised Statutes.  All Claimants of a particular “class” must be paid before the next succeeding class receives any distributions.  In other words, all creditors of a senior class or other Class 3 approved claims must be paid before any subordinate claimant (Class 4 through 8) receives any distribution.  The extent of any payment depends on many factors. It’s not possible at this time to determine the degree to which, if any, Claimants will receive a distribution or when distribution will occur.

 

Question: When will distribution to claimants be made?

 

Answer:    This is difficult to determine.  The liquidation process can take several years and one should not expect payment, if any, until well after the bar date for filing claims, which is September 30, 2002. If your claim is covered by a state insurance guaranty fund/association payment may be earlier.

 

Question:  What is the process for determining the classes of claims, or whose claim will get paid first?

 

Answer:    Nebraska Revised Statute 44-4842 (as passed in 1993) Priority of Distribution identifies payment priorities for companies in rehabilitation and liquidation. A general creditor claim is of a lower priority than certain other claims against an estate.  Before a general creditor claim can be considered for payment, all other claims in classes of superior priority must be satisfied. Payment of administrative expenses of the estate is considered Class 1.  Policyholder and bond losses are Class 3 followed by unearned premium or other premium refunds and general creditor claims in Class 4.

 

Question:    Does guaranty fund protection exist for certain claims?

 

Answer:      Guaranty Fund coverage is afforded for surety claims, subject to limitations, under state guaranty fund associations operated in the states of Arkansas, Kansas, Kentucky, Maine, Maryland, Michigan, Minnesota, and New York. The claim files that may be considered for review by a Guaranty Fund have been forwarded by the Liquidator to the appropriate fund for consideration. If your claim arose in one of the above listed states, return to the Website’s Home Page and open the Guaranty Fund Association page to obtain the necessary contact information.