What happens to a captive when the business shuts it down?
A plan of orderly withdrawal, final filings, then release from regulation
Travis Wegkamp says the department's side of a wind up is not difficult, while being clear that the corporate side involves a lot of legal filings. The captive submits a plan of orderly withdrawal saying what it intends: full dissolution, surrendering the licence and restructuring, or a merger. It completes a final annual statement and statement of economic benefit for the current year. Once articles of dissolution are filed, the certificate of authority is returned, and claims and policies are satisfied, the department releases the company from regulation.
Wegkamp separates two things that get confused. The department's part of winding up a captive is, in his description, not too difficult a process, provided the captive stayed current on its filings and requirements. The corporate part, the legal filings needed to unwind the entity itself, is a separate body of work he does not minimise.
He also says something regulators do not have to say. If a company wants to shut down, he does not take it personally and will not make it difficult, because he does not want to force a business to maintain a captive that no longer fits it.
Key takeaways
A captive winding up files a plan of orderly withdrawal stating whether it is dissolving, surrendering the licence and restructuring, or merging.
Final annual statement and statement of economic benefit filings are required for the current year before release.
The department releases the company from regulation only once articles of dissolution are filed, the certificate of authority is returned, and all claims and policies are satisfied.
The first document is the plan of orderly withdrawal, and it exists so the department knows which exit is being taken. Wegkamp lists the options directly: dissolving the company completely, surrendering the licence and changing the corporate structure, or a merger.
The final filings come next. The captive completes the annual statement and the statement of economic benefit up to the most recent sensible date in the current year, so the department can capture the year's data and report it to the legislature.
From the conversation
Travis Wegkamp
Director, Captive Insurance Division, Utah Insurance Department
“I don't want to force you that to keep and maintain your captive if it's no longer part of your business”
Transcript
Read the full transcript 7 turns
HostNow, if the company is sold or shut down, what happens to the captive and how easy is it to do a
Travis Wegkampdisillusion of a captive? On our end, I would say it's not too difficult. That said, there's a lot of legal filings and things that need to take place for the corporate structure and getting all that taken care of. But, on our end, assuming the captive is stayed up to date compliance with all the requirements and submissions and things like that, I would say it's, not too difficult a process. We try to make it as simple as possible. If, we don
Travis Wegkamp't take it personally, you know, if, a company wants to shut down, I'm not going to make it difficult for them. We'll, help you, know, move along. I don't want to force you that to keep and maintain your captive if it's no longer part of your business, what makes sense for your business. So, yeah, they need to submit a plan of orderly withdrawal. Let us know what they want to do. Are they going to completely
Travis Wegkampdissolve the company? Are they surrendering the license and changing the corporate structure? Is it a merger or something of that nature? Yeah. So submit a work with your captive manager to submit that
Travis Wegkampinformation. Let us know what you want to do. We'll ask that they complete that annual statement and then the statement of economic benefit up to the, up to the most recent date in the, in the current year that makes sense so that we can capture that information and report it to the legislature and have that for us
Travis Wegkampto take statistics there. And then they'll, work with filing the articles of dissolution and submitting those to us. Returning our, the certificate of authority and things of that nature and really just crossing the T's, dotting the I's. And once all that's said and done and claims and everything have been satisfied and there's no ongoing policies, we'll, then release the company from regulation and they can dissolve it all at
Travis Wegkampthat point or liquidate it. Now
Citations
Sources
- Captive, Utah Insurance Departmenthttps://insurance.utah.gov/captive
The views expressed are those of the featured guest, drawn from a recorded conversation, and reflect their own professional experience. Nothing on this page is insurance, tax, legal, or investment advice. Consult your own advisors about your specific situation.
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