Ambac Financial Group Inc., parent of the troubled bond insurer Ambac Assurance Corp., said Monday that it is pursuing the restructuring of its debt with a group of debt holders through a pre-packaged bankruptcy filing. The Company added that if it is unable to reach a debt restructuring agreement, it will file for bankruptcy by the end of this year. The Company's statement can be read by clicking here.
It is reported in the press that the PWC administrators of Lehman Brothers International (Europe) Limited (LBIE), the London-based arm of the Lehman bank, are to appeal the recent Court of Appeal ruling relating to the distribution of segregated client funds. The first instance judge held that those clients of LBIE whose funds should have been segregated, but were not, were not entitled to share in the pot of client money. This follows normal trust law. The Court of Appeal reversed this ruling, on the basis of its construction of the client money rules.
The Insolvency Service issued a consultation paper in July 2010 on proposals for a restructuring moratorium.
This follows a previous consultation paper titled Encouraging Company Rescue, issued in June 2009, which outlined three proposals:
A Maryland bankruptcy court has declared that Side A benefits under a D&O policy are not property of the bankrupt estate, with the result that two former executives who have been accused of making illegal payments and diverting funds from their former employer to start a new venture may be able to recoup certain defense costs. In re: TMST, Inc. f/k/a Thornburg Mortgage, Inc., et al., Docket No. 09-17787 (Bankr.D.Md. Aug. 17, 2010).
Just as this issue of the Insurance and Reinsurance Review was going to press, the Court of Appeal handed down its decision in the appeal in CRC Credit Fund Ltd & Ors v GLG Investments Plc (Sub-Fund: European Equity Fund) & Ors (reported at [2010] EWCA Civ 917) against the decision of Mr. Justice Briggs, reported in our March 2010 issue.
In Lehman Brothers International (Europe)(in administration) v CRC Credit Fund Limited & Ors [2010] EWCA Civ 917 the Court of Appeal considered the first instance judgment of Mr Justice Briggs on the operation of the Client Money Rules (CASS) in relation to the insolvency of Lehman Brothers International (Europe)(LBIE).
A federal judge has ruled that directors and officers of a company in bankruptcy proceedings may continue to access an eroding liability policy to cover their defense costs. The court based its decision on a close examination of the policy language, and alternatively held that the individual directors and officers had shown they were entitled to relief from the automatic stay. In re: Downey Financial Corp., No. 08-bk-13041 (CSS) (Bankr.D.Del. May 7, 2010).
In a much anticipated decision, the Florida Supreme Court closed a statutory loophole that permitted debtors to use a wholly owned limited liability company (LLC) to put their assets beyond the reach of their judgment creditors. In Olmstead v. FTC, Case No. SC08-1009 (Fla. June 24, 2010), the Florida Supreme Court ruled that a court may order a judgment debtor to surrender all right, title, and interest in the debtor's single-member Florida limited liability company to satisfy an outstanding judgment.
The US District Court for the District of Connecticut recently dismissed a customer suit against an insurer, based upon its determination that all of the underlying claims were excluded by the policy’s Insolvency Exclusion.1 Associated Community Bancorp, Inc., et al. v. The Travelers Companies, Inc., et al.
On April 7, 2010, the Florida Office of Insurance Regulation declared Northern Capital Insurance Company, a Florida-based property insurer, to be “insolvent and in hazardous financial condition.” The company had been under the administrative supervision of the Office of Insurance Regulation since May 29, 2009. The company is expected to be placed into receivership and all of its policies are expected to be cancelled shortly after the entry of an order of liquidation.