Re Colonia Insurance (Ireland) Ltd

JurisdictionIreland
Judgment Date15 March 2005
Neutral Citation[2005] IEHC 115
Date15 March 2005
Docket Number[2005,RECORD No. 2005/11 COS
CourtHigh Court

[2005] IEHC 115

THE HIGH COURT

RECORD No. 2005/11 COS

IN THE MATTER OF COLONIA RE INSURANCE (IRELAND) LIMITED
AND
IN THE MATTER OF THE COMPANIES ACTS, 1963 - 2003
Abstract:

Company law - Scheme of arrangement - Solvent company - Companies Act 1963, s. 201

This was a petition of the company for the Court's approval for a solvent scheme of arrangement pursuant to s. 201 of the Companies Act 1963 as amended.

Held by Kelly J. in making an order sanctioning the scheme that the Court was satisfied that the proposed scheme of arrangement was such as an intelligent and honest man, a member of the class concerned and acting in respect of his interests might reasonably approve.

Reporter: R.W.

1

EX TEMPORE JUDGMENT of Mr. Justice Kelly delivered on the 15th day of March, 2005.

2

This is the petition of Colonia Re Insurance Ireland Limited (the company). The company is solvent. It seeks the courts approval for a solvent scheme of arrangement pursuant to s. 201 of the Companies Act, 1963, as amended.

3

The court is familiar with such schemes of arrangement in the case of insolvent companies but not in the case of solvent companies.

4

The company is proposing to enter into the scheme of arrangement for the following reasons.

5

It was incorporated in 1990 as part of the AXA Group. It was involved in the reinsurance of non life insurance business. The company ceased to write any new business as of 31st December, 2002. It continues to have liabilities in relation to the policies underwritten by it prior to 31st December, 2002. These are known as "run off" liabilities. These liabilities are likely to last far into the future. The scheme proposes to establish a mechanism to shorten the time involved in quantifying and paying these "run off" liabilities.

6

This is the first time that an Irish court has been faced with a proposed solvent scheme of arrangement in respect of an insurance company. In such circumstances it

7

is appropriate to seek guidance and assistance from other jurisdictions. I find the judgment of Neuberger J. in Re Osiris Insurance Limited [1999] 1 B.C.L.C. 182 particularly helpful.

8

The functions of the court in considering whether to sanction a scheme are succinctly set out in a passage (which is derived from a number of decisions) in Buckley on the Companies Acts (1981 edition). At pgs. 473-474 it is stated as follows:

9

"In exercising its power of sanction the court will see, first, that the provisions of the statute have been complied with, second, that the class was fairly represented by those who attended the meeting and that the statutory majority are acting bona fide and are not coercing the minority in order to promote interests adverse to those of the class whom they purport to represent, and, thirdly, that the arrangement is such as an intelligent and honest man, a member of the class concerned and acting in respect of his interests, might reasonably approve.

10

The court does not sit merely to see that the majority are acting bona fide and thereupon to register the decision of the meeting, but, at the same time, the court will be slow to differ from the meeting, unless either the class has not been properly consulted, or the meeting has not considered the matter with a view to the interests of the class which it is empowered to bind, or some blot is found in the scheme."

11

The words of Lindley L.J. in In Re English, Scottish and Australian Chartered Bank [1893] 3 Ch. 385 at pg. 409 are also relevant:

12

"Now, it is quite obvious from the language of the Act and from the mode in which it has been interpreted, that the court does not simply register the resolution come to by the creditors or the shareholders, as the case may be. If the creditors are acting on sufficient information and with time to consider what they are about, and are acting honestly, they are, I apprehend, much better judges of what is to be their commercial advantage than the court can be. I do not say it is conclusive, because there might be some blot in a scheme which had passed that had been unobserved and which was pointed out later. While, therefore, I protest that we are not to register their decisions, but to see that they have been properly convened and have been properly consulted and have considered the matter from a proper point of view, that is, with a view to the interests of the class to which they belong and are empowered to bind, the court ought to be slow to differ from them. It should do so without hesitation if there is anything wrong; but it ought not to do...

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