Coopers & Lybrand’s $3bn liquidation of US insurer Emlico, which has been dogged by accusations of fraud, was in turmoil this week after a US court made a ruling that the decision to allow the insurer to move offshore was unlawful.
The ruling by the Massachusetts High Court was hailed as a victory by re-insurers who allege Emlico, the captive insurance arm of US conglomerate General Electric, moved offshore shortly before declaring itself bankrupt as part of a scheme to help GE avoid massive insurance claims.
The re-insurers believe Coopers & Lybrand is implicated in the scheme following its involvement in the break-up of Emlico in Massachusetts before its move offshore to Bermuda in 1995.
The Massachusetts court said in its ruling: ‘There was no lawful transfer, and Emlico never ceased to be a Massachusetts insurer.’
But the matter remained confused following the court’s additional ruling that Emlico remained a Bermuda corporation under Bermuda law.
Coopers said it would be pressing ahead with its liquidation in Bermuda following the ruling.
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