(a) All unclaimed funds subject to distribution remaining in the liquidator's hands when the liquidator is ready to apply to the court for discharge, including the amount distributable to any creditor, shareholder, member or other person who is unknown or cannot be found, shall be deposited with the state treasurer, and shall be paid without interest to the person entitled thereto or that person's legal representative upon proof satisfactory to the state treasurer of the person's right thereto. Any amount on deposit not claimed within six (6) years from the discharge of the liquidator shall be deemed to have been abandoned and shall be escheated without formal escheat proceedings and be deposited with the general fund. Alternatively, the liquidator may elect to apply to the court for authority to hold the unclaimed funds subject to distribution for a period of two (2) years. Thereafter, any unclaimed funds may be distributed to approved claimants who have previously received a distribution, if it is economically feasible for the liquidator to make the distribution, or the liquidator may apply to the court for permission for the funds to be held by the commissioner for the purpose of defraying the costs and expenses of administration of other insolvent insurers for which there are insufficient assets to fund the costs and expenses of administration. With the approval of the supervising court, the liquidator may deposit unclaimed and withheld funds into a segregated account to be known as the closed estate fund, hereinafter the “fund.” The commissioner may thereafter use moneys held in the account to fund the administrative expenses of proceedings against persons subject to this chapter that lack sufficient assets to fund administration. The commissioner shall maintain complete records with respect to all transactions involving the fund and shall prepare an annual accounting of the fund subject to audit by the comptroller of the treasury. If subsequent to disbursement of moneys from the fund, assets of the person become available to fund administration, the fund shall be reimbursed before other administrative expenses are paid.

(b) All funds withheld under this chapter as a special claim and not distributed shall upon discharge of the liquidator be deposited with the state treasurer and paid in accordance with a priority of distribution of claims established by the liquidator. Any sums remaining that would revert to the undistributed assets of the insurer shall be transferred to the state treasurer and become the property of the state under subsection (a), unless the commissioner in the commissioner's discretion petitions the court to reopen the liquidation.