U.K. Schemes of Arrangement

Working with insurance liquidation officials in London, which hosts a massive insurance marketplace covering U.S. and worldwide risks, our lawyers developed new protocols under existing U.K. statutes to ensure that reinsurance assets in insurer liquidation proceedings were recovered efficiently and were then equably distributed to policyholders.  The first such “scheme of arrangement” in 1993 was drafted for five related insurers known collectively as the KWELM companies, which insured more than $5 billion in anticipated claims.  The KWELM scheme of arrangement proved to be very successful and ultimately paid significant percentages of agreed claims up to 90% plus.  The KWELM template also established a creditors committee that included representatives of U.S. policyholders to ensure that U.S. policyholders’ interests were considered.  The scheme of arrangement protocols developed for KWELM formed the basis for a number of similar insurer insolvencies, including some that are still making payments to policyholders to this day.