A recent decision from the High Court in the Walker v Forbes litigation also reaffirms the Court’s protection of a defendant’s personal financial information. The plaintiff, Mr Walker, the liquidator of Property Ventures Ltd, sought discovery of the insurance policy of one of the defendants, Mr Hansen, in an attempt to determine the amount of insurance cover that Mr Hansen might have to meet the liquidator's claim against him.
The Australian Corporations Act 2001 provides that a company in liquidation that holds insurance for the benefit of third parties must pay the proceeds of the insurance policy to those third parties in priority to other creditors. Insurance proceeds payable to third parties under this provision are subject to deductions of "any expenses of or incidental to getting in" those proceeds. The liquidator of Brighton Hall Securities Pty Ltd sought directions from the court regarding the liquidator's entitlement to deduct his fees and expenses from the insurance proceeds.
Reports have estimated that 1,300 UK law firms have been put at risk after Latvian insurer Balva was put into liquidation. Initially Latvian Board of Financial and Capital Market Commission (FCMC) insisted there was no cause for concern as all Balva’s insurance policies would remain effective and be transferred to its replacement underwriter, Berliner. However, when Berliner pulled the pin, declining to cover the Balva policies, panic hit the UK legal market. Berliner's exit was described by one broker as the “biggest hand grenade into [the] bottom end of the market for many years.”
In Saker, in the matter of Great Southern Managers Australia Ltd (Receivers and Managers Appointed) (in liquidation), the plaintiffs were the liquidators of Great Southern Managers of Australia Limited (GSMAL).
The US Federal Deposit Insurance Corporation (FDIC) and the Board of Governors of the Federal Reserve System (FRB) have jointly approved a proposed rule requiring certain companies to periodically submit Resolution Plans (also referred to as “living wills”) and Credit Exposure Reports (the “Proposed Rule”) to the FRB and FDIC.1
On 18 January 2011, the Federal Deposit Insurance Corporation (“FDIC”) issued an interim final rule (the “Rule”) with request for comments regarding certain provisions of Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd- Frank Act”). Title II creates the Orderly Liquidation Authority (“OLA”), which is a mechanism under which “covered financial companies” can be liquidated in a uniform fashion rather than under inconsistent insolvency regimes.
The treatment of derivatives, or “qualified financial contracts”, under state insurance insolvency laws has received increased attention since the financial crisis. Four states passed laws in 2010 that allow for the exercise of certain netting collateral and termination provisions in an insurance insolvency without regard to the automatic stay mechanism and similar laws are anticipated in other states in 2011. Federal laws provide a level of certainty with respect to the treatment of certain swap agreement provisions in a general corporate bankruptcy. The U.S.
In a decision which has not yet been confirmed by the German Federal Court, the Higher Regional Court of Celle (an appellate court) has decided that a German policyholder of UK life insurer Equitable Life is not protected by a scheme of arrangement which had been approved by the London High Court in February 2002 (OLG Celle 8 U 46/09 from 8 September 2009). The claimant had challenged that, following the scheme of arrangement, he would have had received lesser profit payments. A final decision of the German Federal Court is expected at the end of 2010.
In May 2021, the UK Government published a Consultation which set out its proposals for targeted (but significant) amendments to certain aspects of the existing UK insolvency arrangements for insurers.
The UK Government has published a Consultation1 which sets out its proposals for targeted (but significant) amendments to certain aspects of the existing UK insolvency arrangements for insurers.