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News - Schemes challenge upheld by UK High Court.

Europe Intelligence Wire

| July 01, 2006 | COPYRIGHT 2006 Financial Times Ltd. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan.  All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)Copyright

(From Reinsurance)

The English High Court has upheld a challenge to the voting process for solvent schemes of arrangement proposed by a group of 16 insurance companies that underwrote insurance and reinsurance business in pooling arrangements known as the WFUM Pools.

The case, in the Matter of Sovereign Marine & General Ins Co et al., saw a challenge brought by 13 US policyholders, including Goodrich, Textron, Sears Holdings, Exxon Mobil and their affiliated companies. They objected to the proposed scheme on the ground that scheme creditors with existing liabilities and outstanding claims had different rights from scheme creditors with contingent liabilities for asbestos, pollution and other "incurred but not reported" (IBNR) claims, and that these differences required the convening of separate classes for purposes of voting on the proposed schemes. (IBNR claims are claims where the event giving rise to the policyholder's liability (for example, ...

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