Minority of policyholders represented by Covington delay scheme of arrangement

The proposed scheme of arrangement of run-off carrier Minster Insurance Group has been delayed after a UK judge adjourned a hearing until November.

Minster attempted to convene a creditors meeting earlier this year but a number of US policyholders, who are being represented by specialist US law firm Covington & Burling, sought to prevent this in the High Court in London on 23 July.

Minster is being represented by Barlow, Lyde & Gilbert.

The judge in the hearing delayed the creditors meeting and adjourned the case until November.

Minster is co-owned by Audley Gilroy and JP Morgan, which took it on as part of its acquisition of failed investment bank Bear Stearns.

The case is reminiscent of proceedings for the Scottish Lion scheme which have been delayed until 8 January 2010, following objections from a minority of US policyholders.

In that case policyholders are also being represented by Covington and were successful in convincing the judge that their arguments should be listened to in more detail.

“Along with Scottish Lion this could have consequences for schemes, some of them welcome and some not so welcome,” said a legacy market source. “It looks like the BAIC case all over again. Minster has done the hard work in getting rid of their key creditors. But, you will always have different parties interested in any estate. Schemes will continue to be used, but they are not a panacea for all legacy books.”