[J-29-ABCD-2008]
`IN THE SUPREME COURT OF PENNSYLVANIA
`MIDDLE DISTRICT
`
`CASTILLE, C.J., SAYLOR, EAKIN, BAER, TODD, McCAFFERY, JJ.
`
`No. 19 MAP 2006
`
`Appeal from the Order of the
`Commonwealth Court entered January 26,
`2006 at No. 664 M.D. 2003
`
`ARGUED: March 3, 2008
`
`No. 20 MAP 2006
`
`Appeal from the Order of the
`Commonwealth Court entered January 26,
`2006 at No. 666 M.D. 2003
`
`ARGUED: March 3, 2008
`
`::::::::::::::::
`
`::::::::::::::::
`
`JOEL S. ARIO, INSURANCE
`COMMISSIONER OF THE
`COMMONWEALTH OF PENNSYLVANIA,
`IN HIS OFFICIAL CAPACITY AS
`LIQUIDATOR OF RELIANCE
`INSURANCE COMPANY,
`
`Appellant
`
`v.
`
`INGRAM MICRO, INC.,
`
`Appellee
`
`JOEL S. ARIO, INSURANCE
`COMMISSIONER OF THE
`COMMONWEALTH OF PENNSYLVANIA,
`IN HIS OFFICIAL CAPACITY AS
`LIQUIDATOR OF RELIANCE
`INSURANCE COMPANY,
`
`Appellant
`
`v.
`
`MITSUI & CO. (U.S.A.), INC.,
`
`Appellee
`
`

`

`No. 21 MAP 2006
`
`Appeal from the Order of the
`Commonwealth Court entered January 26,
`2006 at No. 668 M.D. 2003
`
`ARGUED: March 3, 2008
`
`No. 22 MAP 2006
`
`Appeal from the Order of the
`Commonwealth Court entered January 26,
`2006 at No. 671 M.D. 2003
`
`ARGUED: March 3, 2008
`
`::::::::::::::::::
`
`::::::::::::::::
`
`JOEL S. ARIO, INSURANCE
`COMMISSIONER OF THE
`COMMONWEALTH OF PENNSYLVANIA,
`IN HIS OFFICIAL CAPACITY AS
`LIQUIDATOR OF RELIANCE
`INSURANCE COMPANY,
`
`Appellant
`
`v.
`
`H.J. HEINZ COMPANY, H.J. HEINZ
`COMPANY, L.P., H.J. HEINZ FINANCE
`COMPANY, AND PORTION PAC, INC.,
`
`Appellees
`
`JOEL S. ARIO, INSURANCE
`COMMISSIONER OF THE
`COMMONWEALTH OF PENNSYLVANIA,
`IN HIS OFFICIAL CAPACITY AS
`LIQUIDATOR OF RELIANCE
`INSURANCE COMPANY,
`
`Appellant
`
`v.
`
`APPLE COMPUTER, INC.,
`
`Appellee
`
`[J-29-ABCD-2008] - 2
`
`

`

`OPINION
`
`DECIDED: February 23, 2009
`MADAME JUSTICE TODD
`In this direct appeal from a single-judge Commonwealth Court order, we consider
`
`whether an insurer’s pre-liquidation payment for a covered loss to an insured constitutes a
`
`preference, and thus is recoverable by a liquidator of the insurer pursuant to 40 P.S.
`
`§ 221.30(a). For the reasons stated below, we conclude a payment made by an insurer to
`
`an insured in the ordinary course of business does not constitute antecedent debt, and
`
`therefore, is not a preference under Section 221.30(a). Accordingly, we affirm the order of
`
`the Commonwealth Court, albeit upon different reasoning than employed by that tribunal.
`
`By way of background, when an insurer becomes insolvent, it is subject to different
`
`statutory treatment under the laws of the various states. Our Commonwealth’s law of
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`insurance rehabilitation and insolvency is codified in Article V of the Pennsylvania
`
`Insurance Department Act of 1921 (“Insurance Act”).1 One concern when an insurer
`
`becomes insolvent is the issue of preferences. Generally speaking, preferences are
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`monies or property transferred to creditors on the eve of an insolvency petition, which
`
`places those creditors in a better position than they would be in if the money or property
`
`had not been transferred. See McCoid, Bankruptcy, Preferences, and Efficiency: An
`
`Expression of Doubt, 67 Va. L. Rev. 249, 249, 259-60 (1981). The liquidator of an
`
`insolvent insurer may institute a preference action to void certain transfers of property. Of
`
`course, a transfer, however, may be non-preferential if it does not fit within the statutory
`
`definition of a preference.
`
`The Insurance Act sets forth what constitutes a preference in Section 221.30:
`
`§ 221.30 Voidable preferences and liens
`
`
`
`1 Act of Dec. 14, 1977, P.L. 280, No. 92, § 2; 40 P.S. §§ 221.1-221.63.
`
`[J-29-ABCD-2008] - 3
`
`

`

`(a) A preference is a transfer of any of the property of an
`insurer to or for the benefit of a creditor, for or on account of an
`antecedent debt, made or suffered by the insurer within one
`year before the filing of a successful petition for liquidation
`under this article the effect of which transfer may be to enable
`the creditor to obtain a greater percentage of this debt than
`another creditor of the same class would receive. If a
`liquidation order is entered while the insurer is already subject
`to a rehabilitation order, then transfers otherwise qualifying
`shall be deemed preferences if made or suffered within one
`year before the filing of the successful petition for rehabilitation
`or within two years before the filing of the successful petition
`for liquidation, whichever time is shorter.
`
`40 P.S. § 221.30(a). In other words, a preference consists of a transfer to a creditor for an
`
`antecedent debt made within a certain period of time prior to the filing of a liquidation or
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`rehabilitation petition. Section 221.30 permits the liquidator to void such preferential
`
`transfers made within one year before the filing of a successful petition for liquidation, or, if
`
`the liquidation order is entered while the insurer is already subject to a rehabilitation order,
`
`then transfers are deemed preferential if made within one year of the successful filing of the
`
`petition for rehabilitation.2 With these background principles in mind, we turn to the facts of
`
`the case.
`
`
`
`2 The rehabilitation and liquidation process was summarized by our Commonwealth Court
`in Vickodil v. Commonwealth, Ins. Dept., 126 Pa. Cmwlth. 390, 396, 559 A.2d 1010, 1012-
`13 (1989):
`
`Rehabilitation of an insurer may be ordered on any number of
`grounds relating to the conduct of business by the insurer or its
`financial condition. . . . Once ordered, the Insurance
`Commissioner is appointed rehabilitator by the Court and has
`broad discretion to structure a plan of rehabilitation. The
`rehabilitator is required to take possession of the insurer’s
`assets . . . and has all the powers of its directors and officers to
`direct, manage and deal with the property and business of the
`insurer. . . . The powers and duties of a liquidator are generally
`the same. In short, the rehabilitator or liquidator step into the
`(continued…)
`
`[J-29-ABCD-2008] - 4
`
`

`

`The facts underlying this appeal are straightforward. In 1999, Reliance Insurance
`
`Company (“Reliance”) issued various insurance policies each known as a “Trade Credit
`
`Insurance Policy” (each a “Policy” and, collectively, the “Policies”) to Apple Computer, Inc.
`
`(“Apple”); H.J. Heinz Company, H.J. Heinz Company L.P., H.J. Heinz Finance Company,
`
`and Portion Pac, Inc. (collectively, “H.J. Heinz”); Ingram Micro, Inc. (“Ingram Micro”); and
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`Mitsui & Co. (“Mitsui”) (Apple, H.J. Heinz, Ingram Micro, and Mitsui, are collectively referred
`
`to as the “Policyholders”). Pursuant to each Policy, Reliance insured the respective
`
`Policyholder and agreed to indemnify the Policyholder for losses arising from the
`
`Policyholder’s customers’ nonpayment for goods and services.
`
`Subsequently, each Policyholder suffered a loss falling within the terms of the Policy
`
`and, pursuant to the terms and conditions of the Policies, each Policyholder made a claim,
`
`through the filing of a Claim and Proof of Loss, with Reliance in 2000.3 Following
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`Reliance’s determination that the losses were covered by the Policies, and execution of a
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`“Certifications and Release Agreement” as required by the Policies, Reliance paid the
`
`various Policyholders amounts due under the Policies in 2000 and early 2001.4
`
`
`
`
`
`(…continued)
`shoes of the insurer’s officers and directors in the conduct of
`that insurer’s affairs.
`
`3 Specifically, Apple filed a Claim and Proof of Loss on April 14, 2000. H.J. Heinz filed its
`Claim and Proof of Loss on February 25, 2000; Ingram Micro filed claims at some
`unverified date on or about this same time; Mitsui filed its Claim and Proof of Loss on June
`9, 2000.
`
`4 Pursuant to the Policies, Reliance paid Apple $1,639,327.56 on August 7, 2000; H.J.
`Heinz $1,248,837.98 on August 28, 2000; Ingram Micro $240,827.24 on or about April 10,
`2001, and $888,085.52 on or about May 8, 2001; and Mitsui $927,576.04 on August 28,
`2000.
`
`[J-29-ABCD-2008] - 5
`
`

`

`In May 2001, M. Diane Koken,
`
`then
`
`Insurance Commissioner
`
`for
`
`the
`
`Commonwealth, presented the Commonwealth Court with a petition to rehabilitate
`
`Reliance. By order dated May 29, 2001, and consistent with the Insurance Act, the
`
`Commonwealth Court appointed the Commissioner to serve as the rehabilitator of
`
`Reliance.5 By the terms of that order, all assets of Reliance were placed under the control
`
`of the Commissioner and the Commonwealth Court. Thereafter, the Commissioner advised
`
`the Commonwealth Court that due to the large number of claims and the value of the
`
`estate, Reliance’s condition was more precarious than initially presented, requiring
`
`immediate attention.
`
`Approximately four months after Reliance’s placement in receivership, on October 3,
`
`2001, the Commissioner advised the Commonwealth Court that she consented to the entry
`
`of an order terminating the rehabilitation of Reliance and placing the insurer into
`
`liquidation.6
`
`The Commonwealth Court granted the petition and appointed the
`
`Commissioner as liquidator.7
`
`
`
`5 Section 221.15(c) of the Insurance Act states in relevant part:
`
`An order to rehabilitate the business of a domestic insurer, or
`an alien insurer domiciled in this Commonwealth, shall appoint
`the commissioner and his successors in office the rehabilitator,
`and shall direct the rehabilitator forthwith to take possession of
`the assets of the insurer including any deposits held by the
`commissioner, and to administer them under the orders of the
`court.
`
`40 P.S. § 221.15(c).
`
`6 Section 221.18(a) provides in pertinent part:
`
`Whenever he has reasonable cause to believe that further
`attempts to rehabilitate an insurer would substantially increase
`the risk of loss to creditors, policy and certificate holders, or the
`(continued…)
`
`[J-29-ABCD-2008] - 6
`
`

`

`Thereafter, the Commissioner initiated actions against the Policyholders in
`
`Commonwealth Court seeking to avoid certain payments made prior to the entry of the
`
`liquidation order and to recover monies paid to the Policyholders pursuant to the Policies
`
`less than one year prior to the rehabilitation pursuant to Section 221.238 and Section
`
`221.26.9
`
`Initially, the Commissioner took the position the Policyholders were not
`
`policyholders or insureds, and the Policies were not insurance policies, but financial
`
`guaranties.10 Each Policyholder filed an answer and new matter to the Commissioner’s
`
`complaint.
`
`The Commonwealth Court consolidated the actions for the purpose of resolving the
`
`issue of whether the payments made to the Policyholders constituted preferences under
`
`
`
`(…continued)
`public, or would be futile, the rehabilitator may petition the
`Commonwealth Court for an order of liquidation.
`
`40 P.S. § 221.18(a).
`
`7 Section 221.20(c) concerns the appointment of the Commissioner as liquidator and
`provides in relevant part:
`
`An order to liquidate the business of a domestic insurer shall
`appoint the commissioner and his successors in office
`liquidator and shall direct the liquidator forthwith to take
`possession of the assets of the insurer and to administer them
`under the orders of the court.
`
`40 P.S. § 221.20(c).
`
`8 40 P.S. § 221.23 (concerning the power of the liquidator to collect debts).
`
`9 40 P.S. § 221.26 (governing the liquidator’s institution of actions).
`
`10 See, e.g., Reply to H.J. Heinz New Matter ¶¶ 4-5, 7; Reply to Ingram Micro New Matter
`¶¶ 5, 6, 7. The Commissioner subsequently altered her position on this matter, conceding
`the Policies were insurance polices and the Policyholders were insureds.
`
`[J-29-ABCD-2008] - 7
`
`

`

`Section 221.30.11 The Commissioner filed a motion for summary judgment in which she
`
`argued that the payments made under the Policies represented preferential transfers and
`
`sought to avoid them pursuant to Section 221.30. The Policyholders filed cross-motions for
`
`summary judgment, contending, inter alia, the monies paid by Reliance to them as
`
`policyholders were in the ordinary course of business and as such were not preferential
`
`payments.
`
`In a single-judge memorandum opinion and order, President Judge James Gardner
`
`Colins granted the Policyholders’ cross-motions for summary judgment, concluding the
`
`transfers at issue were not preferences. Specifically, Judge Colins first agreed with the
`
`Commissioner that policyholders with claims for losses are “creditors” under Section 221.30
`
`and that the payments at issue were for antecedent debt. Judge Colins held, however, that
`
`the debt arose at the first effective date of the insurance policy, not at the time of the filing
`
`of the Claim and Proof of Loss or at the time each Policyholder executed its Certifications
`
`and Release Agreement. Thus, according to Judge Colins, the payments were not
`
`preferences under the statute because the antecedent debts arose outside the one-year
`
`preference period. Notably, and relevant for purposes of our decision today, Judge Colins
`
`did not address or decide the issue of whether a transfer in the ordinary course of business
`
`constitutes an antecedent debt under the preference statute.
`
`The Commissioner filed this direct appeal from the Commonwealth Court’s order.
`
`We have jurisdiction over this matter pursuant to 42 Pa.C.S.A. § 723(a) (providing for
`
`“exclusive jurisdiction of appeals from final orders of the Commonwealth Court entered in
`
`any matter which was originally commenced in the Commonwealth Court except an order
`
`
`11 Upon its own motion, the Commonwealth Court assigned the matter to a referee for
`initial disposition. See 40 P.S. § 221.41(b). The parties were not, however, amenable to
`the appointment of a referee to oversee the preliminary aspects of the matter, and
`therefore, upon request, the Commonwealth Court withdrew the appointment and
`transferred the matter back to the court.
`
`[J-29-ABCD-2008] - 8
`
`

`

`entered in a matter which constitutes an appeal to the Commonwealth Court from another
`
`court, a magisterial district judge or another government unit”).
`
`The issue before us, as stated by the Commissioner, concerns the question of
`
`“Whether the Commonwealth Court erred in holding that the date of issuance of an
`
`insurance policy, rather than the date of the payment by the insolvent insurer, is the
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`transfer date that determines whether the payments were preferential pursuant to 40 P.S.
`
`§ 221.30.” Commissioner’s Brief at 4. We note, however, that the parties have fully
`
`addressed numerous related issues in their briefs concerning the transfers that are the
`
`focus of this appeal, and we ultimately resolve this appeal on one of these issues.
`
`As this matter comes to us in the context of the granting of summary judgment, we
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`first set forth the applicable standards. With respect to the substantive standard concerning
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`summary judgment, the Pennsylvania Rules of Civil Procedure provide in relevant part, that
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`the court shall enter judgment whenever there is no genuine issue of any material fact as to
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`a necessary element of the cause of action or defense that could be established by
`
`additional discovery. Pa.R.C.P. 1035.2(1). Under the rules, a motion for summary
`
`judgment is based on an evidentiary record that entitles the moving party to judgment as a
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`matter of law. Pa.R.C.P. 1035.2. In considering the merits of a motion for summary
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`judgment, a court views the record in the light most favorable to the non-moving party, and
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`all doubts as to the existence of a genuine issue of material fact must be resolved against
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`the moving party. Fine v. Checcio, 582 Pa. 253, 265, 870 A.2d 850, 857 (2005). Finally, a
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`court may grant summary judgment only where the right to such judgment is clear and free
`
`from doubt. Id. (citing Marks v. Tasman, 527 Pa. 132, 589 A.2d 205 (1991)).
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`On review, an appellate court may reverse the granting of a motion for summary
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`judgment if there has been an error of law or an abuse of discretion. Atcovitz v. Gulph Mills
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`Tennis Club, Inc., 571 Pa. 580, 585, 812 A.2d 1218, 1221 (2002). As the issue before us is
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`whether transfers are preferences pursuant to Section 221.30 of the Insurance Law, it
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`[J-29-ABCD-2008] - 9
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`

`

`presents a pure question of law. Accordingly, our standard of review is de novo, and
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`therefore, we owe no deference to the lower tribunal’s determination. Buffalo Twp. v.
`
`Jones, 571 Pa. 637, 645 n.4, 813 A.2d 659, 664 n.4 (2002). Our scope of review, to the
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`extent necessary to resolve the legal question before us, is plenary. Id.
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`Related thereto, we add that an appellate court may uphold an order of a lower court
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`for any valid reason appearing from the record. Wilson v. Plumstead Twp. ZHB, 594 Pa.
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`416, 423 n.3, 936 A.2d 1061, 1065 n.3 (2007); Hader v. Coplay Cement Mfg. Co., 410 Pa.
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`145-46, 189 A.2d 271, 274 (1963) (quoting Thomas v. Mann, 4 Casey (28 Pa.) 520, 522
`
`(1857)); Sherwood v. Elgart, 383 Pa. 110, 115, 117 A.2d 899, 901-02 (1955). This
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`jurisprudential doctrine stems from the focus of review as on the judgment or order before
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`the appellate court, rather than any particular reasoning or rationale employed by the lower
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`tribunal. Hader, 410 Pa. at 145, 189 A.2d at 274-75 (“The only error upon the record is a
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`wrong reason for a right judgment; but as we review not reasons but judgments, we find
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`nothing here to correct.” (quoting Thomas, 4 Casey (28 Pa.) at 522)). With these standards
`
`in hand we consider the arguments of the parties.
`
`The Commissioner offers various arguments as to why the decision of the
`
`Commonwealth Court should be reversed. First, the Commissioner maintains the
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`payments at issue in this appeal satisfy all of the requirements of Section 221.30  the
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`payments were made by Reliance less than one year before its rehabilitation, and they
`
`were made to creditors, the Policyholders, for an antecedent debt. Buttressing this
`
`contention, the Commissioner notes the Commonwealth Court found the Policyholders
`
`were creditors and the payments were for an antecedent debt, as Reliance paid claims for
`
`which the Policyholders submitted proofs of loss months earlier. Moreover, the payments
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`were received by the Policyholders in the one-year period before the petition for
`
`rehabilitation was filed. Second, the Commissioner asserts the Commonwealth Court’s
`
`ruling that the payments were not preferences because the “debt” was outside of the
`
`[J-29-ABCD-2008] - 10
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`

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`preference period is inconsistent with the statute and against the underlying policies of the
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`Act, as Section 221.30 only requires that the transfer, i.e., the payment, be within the
`
`preference period, not that the debt should arise within the preference period. According to
`
`the Commissioner, it is the date of payment, not the age of the antecedent debt, that is the
`
`focus of the statute. Finally, the Commissioner contends that Section 221.30 does not
`
`provide for an ordinary course of business defense, and thus it should not be recognized as
`
`an exemption from the definition of preference.
`
`The Policyholders, while urging affirmance of the Commonwealth Court’s order, do
`
`not do so on the basis of the Commonwealth Court’s rationale. Rather, emphasizing the
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`ability of an appellate court to affirm a lower court’s decision on alternative grounds, the
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`Policyholders argue that a payment made in the ordinary course of business is not a
`
`payment on account of an antecedent debt, and because Reliance’s payments were made
`
`in the ordinary course of business, they are not preferences. Additionally, the Policyholders
`
`submit any debt of Reliance to the Policyholders did not arise until after the Policyholders
`
`executed a form of Certifications and Release which was an express condition in the
`
`Policies to receiving payment for the losses they suffered. As Reliance paid each of the
`
`Policyholders substantially contemporaneously with their satisfaction of this condition of
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`payment, and Reliance’s obligation did not arise until after this condition was satisfied, the
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`Policyholders maintain that the debt was not antecedent at the time of the payment.
`
`Furthermore, the Policyholders assert that the Commissioner provided no “rational basis”
`
`for bringing preference actions against only four of the thousands of Reliance policyholders
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`who received insurance payments during the preference look-back period. Finally,
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`according to the Policyholders, Section 221.30 only applies to “creditors,” and the term
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`“creditor” does not encompass “policyholders.” Therefore, the Policyholders conclude
`
`Section 221.30 does not apply to the payments made by Reliance to the Policyholders.
`
`[J-29-ABCD-2008] - 11
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`

`

`As our analysis involves interpreting Section 221.30 of the Insurance Act, we
`
`necessarily begin by considering the Statutory Construction Act. 1 Pa.C.S.A. §§ 1501 et
`
`seq. The Statutory Construction Act is clear  the objective of all interpretation and
`
`construction of statutes is to ascertain and effectuate the intention of the legislature. 1
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`Pa.C.S.A. § 1921(a). Our Court has found that the best indication of the General
`
`Assembly’s intent is the plain language of the statute. Martin v. Commonwealth, Dep’t of
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`Transp., Bureau of Driver Licensing, 588 Pa. 429, 438, 905 A.2d 438, 443 (2006). When
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`the words of a statute are clear and unambiguous, there is no need to look beyond the
`
`plain meaning of the statute “under the pretext of pursuing its spirit.” 1 Pa.C.S.A. §
`
`1921(b); see Commonwealth v. Conklin, 587 Pa. 140, 152, 897 A.2d 1168, 1175 (2006).
`
`Consequently, only when the words of a statute are ambiguous should a court seek to
`
`ascertain the intent of the General Assembly through consideration of the various factors
`
`found in Section 1921(c). 1 Pa.C.S.A. § 1921(c); Koken v. Reliance Ins. Co., 586 Pa. 269,
`
`288, 893 A.2d 70, 81 (2006).
`
`As the clearest indication of the legislature’s intention is the words it has employed,
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`we first direct our attention to the language of the preference statute. The relevant
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`language in Section 221.30(a), concerning voidable preferences, provides: “A preference
`
`is a transfer of any of the property of an insurer to or for the benefit of a creditor, for or on
`
`account of an antecedent debt, made or suffered by the insurer within one year before the
`
`filing of a successful petition [for rehabilitation].” 40 P.S. § 221.30(a).
`
`For purposes of this opinion, we initially turn to the requirement that the transfer be
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`“for or on account of an antecedent debt,” for if the transfers in question are not on account
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`of an antecedent debt, they are not preferences under our insurance law, and thus not
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`recoverable by the Commissioner. The phrase “antecedent debt” is not defined in the
`
`statute or in our case law. Each party offers a different interpretation of this language. In
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`particular, the Commissioner submits that, as a general matter, an antecedent debt is
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`[J-29-ABCD-2008] - 12
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`

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`considered to be a debt occurring when a creditor first had a claim against a debtor,
`
`whether fixed or contingent on subsequent events. According to the Commissioner, the
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`payments here were made after the Policies’ inception and were made months after the
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`Policyholders made claims for payment, and thus they constitute antecedent debt.
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`Moreover, the Commissioner argues, the preference action cannot be defeated by the
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`contention that Reliance’s payments of proceeds to the Policyholders were made in the
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`ordinary course of business because the Insurance Act provides for no such exemption.
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`Indeed, Section 221.30(a) does not use or refer to the terms “ordinary course of business.”
`
`The Commissioner notes while there is an ordinary course of business exemption in the
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`federal bankruptcy law and in certain state insurance laws, these are set forth as express
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`defenses to a preference action in the statute. According to the Commissioner, if the
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`General Assembly had intended the defense be available, it could have provided for such
`
`an exemption.
`
`The Policyholders do not dispute the general meaning of the phrase antecedent
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`debt, but counter that payments on account of an antecedent debt do not include transfers
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`made in the ordinary course of business as that phrase is used in Section 221.30. Among
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`other arguments, the Policyholders emphasize that the phrase is not defined, and an
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`interpretation recognizing an ordinary course of business exception is consistent with both
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`long-standing judicial decisions under federal bankruptcy law and a recent decision by an
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`Ohio appellate court interpreting an Ohio preference provision identical to Section 221.30.
`
`Based upon the failure of the General Assembly to define the phrase “antecedent
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`debt,” the parties’ differing assertions concerning the meaning of these words, and our
`
`conclusion that both parties have provided reasonable interpretations of the statute, we
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`[J-29-ABCD-2008] - 13
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`

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`conclude that this phrase “antecedent debt” is not free from all ambiguity. Accordingly, we
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`turn to factors set forth in 1 Pa.C.S.A. § 1921(c) to ascertain the intent of the legislature.12
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`In evaluating all of these statutory factors, we conclude those most applicable to this
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`appeal are the occasion and necessity for the statute, the object to be obtained by the
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`statute, former law, including other statutes upon the same subject, and the consequences
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`of a particular interpretation. 1 Pa.C.S.A. § 1921(c)(1), (4), (5), and (6).
`
`The purpose of Article V of the Insurance Act, and the object to be obtained by the
`
`statute, are set forth in the statute itself. Specifically, it is plain that the primary purpose of
`
`Article V is to protect the interests of insureds, creditors, and the public. 40 P.S. § 221.1(c).
`
`Section 221.1(c) states in full:
`
`The purpose of this article is the protection of the interests
`of insureds, creditors, and the public generally, with
`minimum interference with the normal prerogatives of the
`owners and managers of insurers, through (i) early detection
`of any potentially dangerous condition in an insurer, and
`prompt application of appropriate corrective measures; (ii)
`improved methods for rehabilitating insurers, involving the
`cooperation and management expertise of the insurance
`industry; (iii) enhanced efficiency and economy of liquidation,
`through clarification and specification of the law, to minimize
`legal uncertainty and litigation; (iv) equitable apportionment of
`
`
`12 The factors which may be considered in discerning the General Assembly’s intent
`include:
`
`(1) The occasion and necessity for the statute.
`(2) The circumstances under which it was enacted.
`(3) The mischief to be remedied.
`(4) The object to be obtained.
`(5) The former law, if any, including other statutes upon the same
`or similar subjects.
`(6) The consequences of a particular interpretation.
`(7) The contemporaneous legislative history.
`(8) Legislative and administrative interpretations of such statute.
`
`1 Pa.C.S.A. § 1921(c).
`
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`

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`any unavoidable loss; (v) lessening the problems of interstate
`rehabilitation and liquidation by facilitating cooperation between
`states in the liquidation process, and by extending the scope of
`personal jurisdiction over debtors of the insurer outside this
`Commonwealth; and (vi) regulation of the insurance business
`by the impact of the law relating to delinquency procedures and
`substantive rules on the entire insurance business.
`
`40 P.S. § 221.1(c) (emphasis added); see also Foster v. Mutual Fire, Marine and Inland Ins.
`
`Co., 554 Pa. 387, 676 A.2d 652, 661 (1996) (“one of the purposes of the Act is the
`
`protection of the interests of insureds, creditors, and the public generally”); Koken, 586 Pa.
`
`at 291, 893 A.2d at 83 (quoting Koken v. Steinberg, 825 A.2d 723, 726 (Pa. Cmwlth. 2003)
`
`(“It is now settled law in Pennsylvania that an insurance regulator is charged not only with
`
`representing the public interest but the interests of policyholders and creditors as well”)).
`
`Moreover, Article V is to be “liberally construed” to effect this purpose. 40 P.S. § 221.1(b).
`
`Additionally, preference provisions in particular are designed to achieve equitable
`
`apportionment of unavoidable losses. 40 P.S. § 221.1(c). Consistent therewith, it is
`
`beyond debate that such provisions are intended to “discourage creditors fromracing to the
`
`courthouse to dismember the debtor during his slide into bankruptcy.” See Wilcox v. CSX
`
`Corp., 70 P.3d 85, 91 (Utah 2003) (citation omitted); see also Miniscribe Corp. v. Keymarc,
`
`Inc., 123 B.R. 86, 90 (Bankr. D. Colo. 1991) (“[t]he purpose of the preference statute is to
`
`discourage creditors from engaging in unusual collection practices which help dismember
`
`the debtor” (emphasis added)).
`
`The General Assembly has also instructed us to consider other law addressing this
`
`same topic in understanding its intentions. 1 Pa.C.S.A. § 1921(c)(5). We first consider
`
`federal bankruptcy law and then turn to treatment of the subject by other states.
`
`Use of federal bankruptcy law for guidance in interpreting ambiguous state
`
`insurance insolvency law is commonly accepted. Wilcox, 70 P.3d at 92; Pine Top Ins. Co.
`
`v. Bank of America Nat’l Trust and Sav. Assoc., 969 F.2d 321, 324 (7th Cir. 1992) (“When
`
`[J-29-ABCD-2008] - 15
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`

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`confronted with a voidable preference dispute under state insurance law, it is customary to
`
`look to federal bankruptcy law for guidance”). Article V was enacted in 1977; thus, the
`
`Bankruptcy Act of 1898, rather than the Bankruptcy Code of 1978, is most germane to the
`
`interpretation of Section 221.30. The preference provision in the earlier Bankruptcy Act did
`
`not expressly include an exception for payments made in the ordinary course of business.
`
`The courts interpreting the federal law, however, developed what came to be known as the
`
`“current expense” rule to cover certain situations in which a debtor’s payments on the eve
`
`of bankruptcy did not diminish the estate because tangible assets were obtained in
`
`exchange for the payment. Marshall v. Florida National Bank of Jacksonville, 112 F.2d
`
`380, 381-82 (5th Cir. 1940). Under this doctrine, courts often allowed an exception for
`
`regular business expenses based on the notion that current expenses were not antecedent
`
`debt, and were, therefore, not preferential. In re Peninsula Roofing & Sheet Metal, Inc., 9
`
`B.R. 257, 261-62 (Bankr. Ct. Mich 1981). Courts believed that such an exception did not
`
`detract from the general policy of a preference provision to discourage unusual action by
`
`the debtor or his creditors during the debtor’s slide into bankruptcy. Matter of Emerald Oil
`
`Co., 695 F.2d 833, 836 (5th Cir. 1983).
`
`Thereafter, in 1978, the federal bankruptcy law was reformed. Specifically, Section
`
`547(c)(2) provides a trustee may not avoid a transfer if the transfer was “in payment of a
`
`debt incurred by the debtor in the ordinary course of business or financial affairs of the
`
`debtor and the transferee; and such transfer was (A) made in the ordinary course of
`
`business or financial affairs of the debtor and the transferee; or (B) made according to
`
`ordinary business terms.” 11 U.S.C. § 547(c)(2). While Section 547(c)(2) is not an express
`
`codification of the current expense rule or its statutory equivalent, and the parties do not
`
`contend that the transfers at issue in this appeal would qualify as a current expense, which
`
`requires the transfer of property to the insolvent entity, the policy underlying Section
`
`547(c)(2) and the judicially-recognized current expense rule under the Bankruptcy Act of
`
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`

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`1898 is the same. Barash v. Public Finance Corp., 658 F.2d 504, 510-11 (7th Cir. 1981); In
`
`re Acme-Dunham, Inc., 50 B.R. 734, 740 (D.C. Me. 1985).
`
`Therefore, considering analogous federal bankruptcy law, we see the federal
`
`judiciary has seen fit to recognize an exception to the then-existing statutory preference
`
`provision in the form of the current expense rule, and the policy behind that rule was later
`
`embraced in the ordinary course of business exemption.
`
`Turning to state law treatment of this subject, one state has recognized an ordinary
`
`course of business transfer exception in its statutory law. See Utah Code § 31A-27-321
`
`(2001) (providing an affirmative defense of a payment being made in the ordinary course of
`
`business). Yet, recently two state courts analyzed the issue of whether such an exception
`
`exists when the statute does not explicitly provide for such an exemption, as is the case in
`
`Pennsylvania. While certainly not binding, we look to these decisions to guide us