Case No. 05-12678(RDD), (Jointly Administered).United States Bankruptcy Court, S.D. New York.
July 26, 2005
ORDER GIVING FULL FORCE AND EFFECT TO U.K. SCHEME
ROBERT DRAIN, Bankruptcy Judge
Hearings having been held before the Court on May 24, 2005, June 3, 2005 and July 20, 2005 (collectively, the “Hearings”) to consider the Section 304 Petitions (the “304 Petitions”) of Catherine Geraldine Regan (the “Petitioner”), as the Foreign Representative of RiverStone Insurance (UK) Limited (“RiverStone”) and Sphere Drake Insurance Limited (“SDI,” and together with RiverStone, the “U.K. Scheme Companies,” and each a “U.K. Scheme Company”), dated April 19, 2005, and the Verified Petition for an order giving full force and effect to the U.K. Scheme (the “U.K. Scheme”) under Section 304(b) of the Bankruptcy Code, dated April 19, 2005 (the “Verified Petition”) filed with the Court pursuant to Section 304 of title 11 of the United States Code (the “Bankruptcy Code”); and due notice of the Hearings having been given pursuant to this Court’s Order dated April 20, 2005, as reflected in the affidavits of service and publication heretofore filed with the Court; and the Court having considered and reviewed the (i) 304 Petitions,
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the Verified Petition and the Memorandum of Law submitted by the Petitioner in support of the 304 Petitions and the Verified Petition, each filed on April 19, 2005; (ii) Answer to Section 304 Petition of General Reinsurance Corporation and North Star Reinsurance and related Declaration of Anthony George Bompas, each filed with the Court on May 20, 2005; (iii) Motion of Nationwide Mutual Insurance Company, Nationwide Fire and National Casualty Company to Dismiss Petitions Ancillary to a Foreign Proceeding, filed with the Court on May 23, 2005; (iv) Petitioner’s Response to Answer to Verified Petition by General Reinsurance Corporation and North Star Reinsurance Corporation, filed with the Court on May 23, 2005; (v) Petitioner’s (a) Response to Motion to Dismiss by Nationwide Mutual Insurance Company, Nationwide Fire and National Casualty Company and (b) Related Motion to Strike, filed with the Court on May 23, 2005; (vi) Supplemental Declaration of Martin Luke Moore, QC, filed with the Court on May 27, 2005; (vii) Supplemental Declaration of Anthony George Bompas, filed with the Court on June 2, 2005; (viii) Hearing Brief of Respondents Nationwide Mutual Insurance Company, Nationwide Fire and National Casualty Company, filed with the Court on June 2, 2005; (ix) Petitioner’s Response to Hearing Brief of Respondents Nationwide Mutual Insurance Company, Nationwide Fire and National Casualty Company Nationwide and the related Declaration (Second Supplemental) of Martin Luke Moore QC, each filed with the Court on July 8, 2005; (x) Affidavit of James P. Corcoran in Opposition to Verified Petition for Ancillary Relief, filed with the Court on July 11, 2005; (xi) Responsive Memorandum of Nationwide Mutual Insurance Company, Nationwide Fire, and National Casualty Company in Opposition to Verified Petition, filed with the Court on July 15, 2005; (xii) Petitioner’s Motion to Strike the Supplemental Hearing Brief of Respondents Nationwide Mutual Insurance Company, Nationwide Fire, and National Casualty Company, filed with the Court on July 19, 2005; and (xiii) Declaration of Catherine Geraldine Regan, dated July 19, 2005; and Respondents Nationwide Mutual Insurance Company, Nationwide
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Fire, National Casualty Company, General Reinsurance Corporation and North Star Reinsurance Corporation having withdrawn their appearances and each of their respective pleadings filed with the Court in these cases and their objections to the relief requested by Petitioner; and no other objections or other responses having been filed thereto; and, as represented in the affidavits of service and publication filed with the Court, all interested parties having had due and proper notice and an opportunity to be heard; and the Court having heard arguments by counsel appearing at the Hearings; and all objections to the Petitioner’s request for relief having been settled and withdrawn, thereby permitting this Order to be entered on a wholly consensual basis, which fact informs and establishes the basis for all of the Court’s findings and conclusions herein; and after due deliberation and sufficient cause appearing therefor, the Court finds and concludes as follows:
1. The Petitioner has demonstrated that the U.K. Scheme Companies are subject to a foreign proceeding within the meaning of Sections 101(23) and 304(a) of the Bankruptcy Code, before the High Court of England and Wales in London, England (the “English Court”). The English Court sanctioned the U.K. Scheme of the U.K. Scheme Companies by order dated December 15, 2004. The Petitioner is the foreign representative of the U.K. Scheme Companies, within the meaning of Sections 101(24) and 304(a) of the Bankruptcy Code, and the relief requested in the Verified Petition is consistent with the factors set forth in Section 304(c) of the Bankruptcy Code.
2. The relief requested by Petitioner is in the interests of the public and international comity and is warranted under Section 304 of the Bankruptcy Code, and Bankruptcy Rules 7065, 1011 and 1013(b), and such relief will not cause hardships to the parties that are not outweighed by the benefits.
3. Venue is proper in this District pursuant to 28 U.S.C. § 1410.
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NOW, THEREFORE, IT IS HEREBY:
ORDERED, that the U.K. Scheme is hereby given full force and effect in the United States and is binding on and enforceable in accordance with its terms against all parties with contacts to the U.S.; and it is further
ORDERED, that on and with effect from the Projected Effective Date[1] or the Early Projected Effective Date, the U.S. Requirements Business is transferred to and vested in RiverStone in accordance with and subject to the U.K. Scheme; and it is further
ORDERED, that notwithstanding any other provision of this Order, this Order shall not effect an amendment of the terms or assets of any trust established under the laws of any U.S. jurisdiction by SDI for the benefit of claimants with respect to the U.S. Requirements Business or any letters of credit issued for the account of SDI for the benefit of such claimants; and it is further
ORDERED, that on and with effect from the Projected Effective Date or the Early Projected Effective Date, all entities are enjoined from commencing or continuing any proceedings (including, without limitations, all legal actions, all legal proceedings, arbitration, or any judicial, quasi judicial, administrative or regulatory action, proceeding or process whatsoever) against SDI or its property in the U.S. in respect of the U.S. Requirement Business; and it is further
ORDERED, that on and with effect from the Projected Effective Date or the Early Projected Effective Date, all the rights, benefits and powers of SDI under or by virtue of the U.S. Requirements Business and any reinsurance in respect of the U.S. Requirements Business, and all rights and claims (present or future, actual or contingent) against any third party in relation to the U.S. Requirements Business therein are transferred to and vested in RiverStone in accordance with and subject to the U.K. Scheme; and it is further
ORDERED, that on and with effect from the Projected Effective Date or the Early
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Projected Effective Date, assets in respect of the U.S. Requirements Business are transferred to and vested in RiverStone in accordance with and subject to the U.K. Scheme; and it is further
ORDERED, that on and with effect from the Projected Effective Date or the Early Projected Effective Date, the liabilities arising out of the U.S. Requirements Business are transferred to RiverStone and such liabilities are liabilities of RiverStone and cease to be liabilities of SDI in accordance with and subject to the U.K. Scheme; and it is further
ORDERED, that on and with effect from the Projected Effective Date or the Early Projected Effective Date, RiverStone will accept without investigation or requisition such title as SDI had to the assets in respect of the U.S. Requirements Business; and it is further
ORDERED, that SDI and RiverStone shall as and when appropriate have executed all such documents and shall as and when appropriate have performed such other acts and things as may be required to effect or perfect the transfer to and vesting in RiverStone of any assets in respect of the U.S. Requirements Business in accordance with the U.K. Scheme; and it is further
ORDERED, that on and with effect from the Projected Effective Date or the Early Projected Effective Date, the transfers in respect of the U.S. Requirements Business are effective in the U.S. notwithstanding any provision to the contrary in any agreement or arrangement with any person and whether or not SDI would apart from the terms of the U.K. Scheme have capacity to effect the same; and it is further
ORDERED, that on and with effect from the Projected Effective Date or the Early Projected Effective Date, all rights, benefits and advantages conferred on or vested in SDI in respect of the U.S. Requirements Business by or under all guarantees or sureties subject to the federal laws of the U.S. or the laws of any one of the states, to which SDI is a party, are by virtue of the U.K. Scheme and the U.K. Final Order transferred to and vested in RiverStone; and it is further
ORDERED, that on and with effect from the Projected Effective Date or the Early
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Projected Effective Date, the payment of all premiums attributable to or referable to the U.S. Requirements Business held by persons located in the U.S. and any reinsurance recoveries attributable to or referable to reinsurance coverage in respect of the U.S. Requirements Business written by U.S. persons shall be made to RiverStone; and it is further
ORDERED, that any mandate or other instructions in force on the Projected Effective Date or the Early Projected Effective Date and providing for the payment by a banker or other intermediary located in the U.S. of premiums payable under the U.S. Requirements Business is, on and with effect from the Projected Effective Date or the Early Projected Effective Date, effective as if it had provided for and authorized such payment to RiverStone; and it is further
ORDERED, that any mandate or other instruction in force on the Projected Effective Date or the Early Projected Effective Date and effective in the U.S. as the manner of payment by SDI of any sum payable under the U.S. Requirements Business is continued in force as an effective authority of RiverStone; and it is further
ORDERED, that on and with effect from the Projected Effective Date or the Early Projected Effective Date: (i) any proceedings (including, without limitations, all legal actions, all legal proceedings, arbitration, or any judicial, quasi judicial, administrative or regulatory action, proceeding or process whatsoever) which immediately prior to the Projected Effective Date or the Early Projected Effective Date are pending in the U.S. by or against SDI are continued by or against RiverStone, (ii) RiverStone is substituted for and shall replace SDI in relation to such proceedings, (iii) RiverStone is entitled to all defenses, claims, counterclaims and rights of set-off which would have been available to SDI in relation to such proceedings, and (iv) each party to any such proceeding shall be entitled to all defenses, claims, counterclaims and rights of set-off which would have been available to such party against SDI in relation to such proceedings; and it is further
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ORDERED, that SDI and RiverStone, and any of their agents, are empowered, as and when appropriate, to execute such documents and take such action as may be required to effect or perfect the transfer to and vesting in RiverStone of any assets in respect of the U.S. Requirements Business in accordance with the terms of the U.K. Scheme; and it is further
ORDERED, that without prejudice to the generality of any other provisions of the Proposed Order or the U.K. Final Order, on and with effect from the Proposed Effective Date or the Early Projected Effective Date, any term in any document, contract or agreement, which is governed by the laws of the U.S. and/or by the laws of one of the states and to which a person or entity with contacts to the U.S. is a party, and which evidences or constitutes a policy in respect of the U.S. Requirements Business that references SDI and/or to rights, powers, duties and/or obligations imposed upon SDI, shall, to the extent necessary to give full effect to the U.K. Scheme, be read, construed and treated as references to RiverStone and/or to rights, powers, duties and/or obligations imposed upon, RiverStone, its board of directors or other officers, employees or agents of RiverStone subject to and in accordance with the terms of the U.K. Scheme; and it is further
ORDERED, that without prejudice to the generality of the other provisions of the Proposed Order or the U.K. Final Order, any contract of reinsurance including any of the reinsurance in respect of the U.S. Requirements Business, which is governed by the laws of the U.S. and/or by the laws of any one of the states, and to which a person or entity with contacts to the U.S. is a party, which is in effect at the Projected Effective Date or the Early Projected Effective Date, under which SDI is reinsured, shall to the extent that it related to the U.S. Requirements Business, continue in full force and effect with the substitution of RiverStone in the place of SDI as the reinsured party thereunder, but otherwise on the terms which applied before the Projected Effective Date or the Early Projected Effective Date and on the basis that RiverStone is reinsured thereby for all purposes as if all references therein (however worded and whether express or implied) to SDI
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were references to RiverStone; and it is further
ORDERED, that the production of a certified copy of the U.K. Final Order, the Proposed Order as executed by this Court, and a copy of a certificate by a director of SDI or of RiverStone that the U.K. Scheme has taken effect, is, for all purposes, evidence of the transfer to, and vesting in, RiverStone of the U.S. Requirements Business and any and all assets and liabilities arising thereunder in accordance with this Court’s order, the U.K. Final Order and the U.K. Scheme; and it is further
ORDERED, that neither the transfer of the U.S. Requirements Business nor any other matter provided for by the U.K. Final Order shall:
a. invalidate or discharge any agreement, obligation, contract or instrument to which SDI or RiverStone is a party or is bound; constitute a breach of, or default under, any agreement, obligation, contract or instrument to which SDI or RiverStone is a party or is bound; or trigger a requirement that any obligation be performed sooner or later than would have otherwise been the case;
b. allow any party to any agreement to terminate that agreement when they would not otherwise have been able to do so;
c. entitle any party to any agreement to which SDI or RiverStone is a party or is bound to vary the terms of that agreement when he would not otherwise have been able to do so; or
d. cause the imposition of any greater or lesser obligation on any party to any such agreement when that greater or lesser obligation would not otherwise have been imposed; and it is further
ORDERED, that any party to any agreement, obligation, contract or instrument with SDI that has the right to pursue a cause of action or assert a defense against SDI for a disputed claim in
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a court located in the United States shall, on and with effect from the Projected Effective Date or the Early Projected Effective Date, be entitled to pursue any such claim or assert such defense against Riverstone in a court located in the United States having jurisdiction over such party’s claim to the same extent that such party could have asserted such claim or defense against SDI in the absence of this Order; and it is further
ORDERED, that nothing in this Order shall be construed to enjoin any state insurance regulator or the International Insurers Department of the National Association of Insurance Commissioners (the “IID”), to the extent they may have jurisdiction over SDI, from taking any administrative or regulatory action against SDI or its property in the United States, including any trust fund established by SDI pursuant to any applicable state insurance law or regulation; and it is further
ORDERED, that nothing in this Order shall be construed to divest any state insurance regulator or the IID, to the extent they may have jurisdiction over SDI, from performing its oversight responsibilities with respect to any trust fund established by SDI pursuant to any applicable state insurance law or regulation; and it is further
ORDERED, that this Court shall retain jurisdiction with respect to the enforcement, amendment or modification of this Order, any adversary proceeding or additional relief requested in this Section 304 proceeding and any request by an entity for relief from the provisions of this Order for cause shown, and further retains jurisdiction with respect to the issuing of such further orders as may be necessary to facilitate the implementation in the U.S. of this Order and the U.K. Final Order in connection with the U.K. Scheme and to facilitate the U.K. Scheme; and it is further
ORDERED, that every person and entity that has a claim of any nature or source against SDI and/or that is a party to any action or other legal proceeding (including, without limitations, arbitration, or any judicial, quasi judicial, administrative or regulatory action, proceeding or
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process whatsoever) in which SDI is or was named as a party, or as a result of which a liability of SDI may be established, is required to place the Petitioner’s U.S. counsel, Dreier LLP, 499 Park Avenue, New York, New York 10022 (Attn: Norman N. Kinel, Esq. and Jonathan F. Linker, Esq.) on the master service list of any such action or other legal proceeding and to take such other steps as may be necessary to ensure that such counsel receives (i) copies of any and all documents served by the parties to such action or other legal proceedings or issued by the court, arbitrator, administrator, regulator or similar official having jurisdiction over such action or legal proceeding, and (ii) any and all correspondence or other documents circulated to parties named in the master service list; and it is further
ORDERED, that action taken by the Petitioner, or her successors, agents, representatives, advisors or counsel, in preparing, disseminating, applying for, implementing or otherwise acting in furtherance of or in connection with the U.K. Scheme, this Order, or this Section 304 proceeding, or any adversary proceeding herein, shall not be deemed to constitute a waiver of the immunity afforded to such persons under Section 306 of the Bankruptcy Code; and it is further
ORDERED, that notice of the entry of this Order shall be served:
(a) by United States mail, first class postage prepaid, on or before August 1, 2005, upon known U.S. parties-in-interest, including policyholders, creditors, brokers, reinsureds, and litigants, at the time of such service; and
(b) by a single publication in each of The Wall Street Journal (U.S. Edition) and Business Insurance magazine on or before August 1, 2005; and it is further
ORDERED, that service in accordance with this Order shall be deemed good and sufficient service and adequate notice for all purposes; and it is further
ORDERED, that within fourteen (14) days of the Projected Effective Date or the Early Projected Effective Date, notice of the occurrence of the Effective Date or the Early Effective Date
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shall be provided to the same parties and in the same manner as set forth in the immediately preceding decretal paragraph; and it is further
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ORDERED, that this Order shall have no precedential value in any other case or controversy either in this Court or any other Court.
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