Question
(redacted)
April 30, 1985
Premerger Notification Office
Bureau of Competition, Room 303
Federal Trade Commission
Washington, D.C. 20580
Re:Request For Informal Interpretation of Section 7A(c)(4) and Rule Section 801.1(a)(2)
Gentlemen:
This letter is a request on behalf of (redacted) for an informal interpretation by the Commissions staff of section 7A(c)(4) of the Hart-Scott-Rodino Act and rule section 801.1(a)(2) regarding acquisition of the assets of (redacted), through (redacted), the Insurance Commissioner of California (Commissioner). This request is made pursuant to section 803.30 of the Commissions rules.
As a result of an examination of the financial condition of (redacted) the Commissioner determined that (redacted) was insolvent, and that further transaction of its business would be hazardous to its policyholders, creditors, and to the public. Such insolvency is a ground for conservatorship pursuant to the provisions of California Insurance Code section 1011(i), and the Commissioner was appointed conservator of (redacted) on (redacted) 1985 by order of the Superior Court of the State of California for the County of (redacted) Superior Court).
Pursuant to Article 14 of the California Insurance Code and said court order, the Commissioner, as conservator, is vested with title to all of the property and assets of (redacted) possesses all of (redacted) assets, books, records, and property, and all persons are enjoined from interfering with the conservators possession and title thereto. CAL. INS. CODE 1101. The Commissioner is empowered with all authority and power necessary to operate the business of (redacted) including the right to sell, transfer, or otherwise dispose of all of its property upon such terms and conditions as the conservator deems proper. Id. 1037.
(redacted) and the Commission, as conservator, have executed an Agreement dated April 22, 1985, whereby (redacted) will acquire the assets of (redacted) from the Insurance Commissioner. But for the exemptions provided by section 7A(c)(4) and rule section 801.1(1)(2), the notification and report form would be required to be filed in order to consummate the transaction.
Section 7A(c)(4) provides that transfers to or from a Federal agency or a State or political subdivision thereof are exempt from the filing requirements of the Act. In addition, rule section 801.1(a)(2) provides that the term entity shall not include the United States, any of the States thereof, or any political subdivision or agency of either . . . . By excluding federal or state agencies from the definition of entity, agencies cannot be persons or included within persons. Because section 7A of the Act only covers transactions by persons, the Act does not apply to those excluded from the definition.
The commissioner is an agency of the State of California and thus is excluded from the term entity, as provided by rule section 801.1(a)(2) and falls under the statutory exemption of section 7A(c)(4). By virtue of the broad powers granted to the Commissioner, as conservator, by Article 14 of the California Insurance Code and the court order, all beneficial interests of (redacted) vest in the Commissioner and, for purposes of the Act, the Commissioner is the sole owner of (redacted).
(redacted) therefore respectfully requests an informal interpretation from the Commissions staff that the above exemptions apply to (redacted) acquisition of (redacted). Due to the time deadlines contained in the Agreement, your immediate review is requested.
Attached for your review are copies of the executed Agreement, the order of the Superior court, and the controlling statutes of the California Insurance Code. Also attached are the referenced provisions of the Act and rules upon which (redacted) exemptions are based.
If you have any questions or require additional information, please contact the undersigned at (redacted).
Very truly yours,
(redacted)
Attachments [Portions of Superior Court Order, sections of the California Insurance Code and select portions of the Act (43 Fed. Reg. at 33450 and 33456 (July 31, 1978)). These attachments were not typed.]
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