Claims against LUI may cost billions

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The Independent Online
THE provisional liquidators of London United Investments, the collapsed insurer, will this week publish a scheme of arrangement listing billions of pounds of claims against the group and an estimate of how much the British insurance industry will have to pay to cover LUI's heavy losses, writes John Willcock.

Ian Bond and Chris Hughes of Coopers & Lybrand were appointed provisional liquidators to LUI when it collapsed in early 1990. Mr Bond said yesterday that estimating what claims LUI would face over the next 20 years was a hazardous process, since it all depended on court claims in the US.

'There are 250 sites covered by LUI in the US which face pollution claims,' said Mr Bond. 'The liabilities from these could total pounds 10m or pounds 10bn, depending on which way the courts rule.'

The big question facing UK insurers, how much they will have to pay to the Policyholders' Protection Board, also depends on the outcome of US litigation, said Mr Bond. 'It may well be more than the current pounds 250m estimate, if all the worst bits of the litigation go against the insurers.'

The provisional liquidators are sending 10,000 copies of their 215-page report to creditors next weekend. Mr Bond said the scheme document still needed to be signed by several members of the creditors' committee, which is made up of US insurers.

Creditors will meet on 15 November to vote on whether to accept the scheme, which will consist of a pay-off phased over several years.