Lawyers, doctors, accountants and other individual policyholders whose insurance was placed with Walbrook will be able to make a claim upon the Policyholders Protection Board, which will seek to raise the necessary funds from the insurers.
Ian Bond, deputy chairman of Cork Gully and one of three provisional liquidators appointed by the High Court, said it is likely to be at least six months before the board can establish the size of the necessary levy. The delay may be longer because the House of Lords may have to clarify what constitutes a claim upon Walbrook at the time of liquidation.
Walbrook's draft accounts show assets of pounds 909m and liabilities of nearly pounds 1.3bn.
The appointment of provisional liquidators followed the recent failure of a plan to refinance Walbrook put together by the company's directors.
Transit Casualty, an insolvent US insurer that is one of Walbrook's largest creditors and which led the opposition to the directors' plan, believes the appointment of provisional liquidators will provide a more efficient payment of creditors.
Ian Bond and his Cork Gully colleague Chris Hughes are already provisional liquidators of four other LUI subsidiaries - Kingscroft Insurance, El Paso Insurance, Lime Street Insurance and Mutual Reinsurance.
The so-called KELM companies have similar creditors to Walbrook and wrote similar business. Cork Gully hopes to offer Walbrook's creditors a scheme similar to that they are putting together for KELM. Transit believes this will provide a more efficient way of dealing with claims run-off.
Gareth Hughes of Ernst & Young, the third provisional liquidator, will handle any conflicts between KELM and Walbrook.Reuse content