Chester Street is the first large insurer to fall victim to an increasing number of asbestosis claims.
The company’s liabilities arise from the pre-1990 insurance deals of Iron Trades Employers Association Limited which was transferred to Chester Street as part of a restructuring programme. The ongoing business of Iron Trades was sold in February last year to QBE International Insurance Limited. But as more claims have arisen, so have concerns over Chester Street’s ability to meet future liabilities.
The move to provisional liquidation followed the issuing of a scheme of arrangement on 19 December 2000 because of the company’s position and was designed to provide the best solution for creditors if the company’s liabilities exceeded its assets.
The scheme would see Chester Street pay part of any claim and in the event of deficiency could include top-up payments from the Policyholders Protection Board.
Parner Dan Schwarzmann, who along with Colin Bird was appointed by PwC to the project, said: ‘I believe that the Scheme continues to be in the best interests of scheme creditors as a whole and therefore strongly recommended that scheme creditors vote in favour of it.’
Bird said he hoped to avoid putting the company into liquidation.
‘If it goes bust…people don’t get paid for years,’ he told Saturday’s Financial Times.
The scheme of arrangement relies upon a majority of at least 75% by value of those present at a creditors’ meeting to vote in favour of the plan.
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