General Insurance Article - Schemes of Arrangement announced for Stronghold Insurance


On Wednesday 10 February 2021 the High Court of Justice, Business and Property Courts of England and Wales, Insolvency and Companies Court (Chancery Division) sanctioned the Direct Scheme and the General Scheme (together the “Schemes”) in relation to Stronghold Insurance Company Limited (in Administration) (“Stronghold”).

 Stronghold was incorporated in 1962 and has been in run-off since 1985. The insurance and reinsurance contracts underlying the Company’s remaining liabilities are typically complex liability covers. These contracts have given rise to many different claim types, including asbestos related claims, environmental pollution claims and claims from other health hazards (“APH claims”).

 Dan Schwarzmann, partner at PwC and Joint Scheme Administrator of Stronghold, said: “APH claims are latent and long-tail, and there are many complexities involved in their valuation. The Schemes, with their approved claims assessment methodology, will allow a fair and efficient resolution of creditor claims against Stronghold and deliver the best overall outcome for creditors.

 Creditors are encouraged to monitor our website for updates on progress and information on submitting claims against Stronghold before the appropriate claim deadlines.”

 Nigel Rackham, director at PwC and Joint Scheme Administrator of Stronghold, said: “We are really pleased to announce that the Schemes have been sanctioned by the UK Courts. Both Schemes were unanimously approved by creditors at the recent Scheme Meetings. The use of schemes of arrangement is commonplace amongst insolvent insurance estates and the Schemes will allow the Company to move towards closure.

 “The Scheme Administrators will now file petitions with the United States Bankruptcy Court of the Southern District of New York seeking an Order enforcing both Schemes under Chapter 15 of the US Bankruptcy Code.

 “Direct Scheme Creditors will be required to submit a claim form within 180 days of the Direct Scheme becoming effective, notifying the Company of any Direct Scheme Claims. Claim information in relation to the General Scheme will be communicated to General Scheme Creditors at a later date.”
  

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