Around 300 underwriting members of the loss-making insurance community are attempting to block Lloyd's attempts to seize assets belonging to thousands of members who invested in the market. Lloyd's wants the members' money to meet insurance claims.
Central London lawyers Chethams have told David Rowland, chairman of Lloyd's, in a letter sent yesterday, that 'we are instructed to file writs of summons endorsed with points of claim in the commercial division of the High Court of Justice which should shortly be served on you, seeking amongst other things, an order preventing you from further drawing down on the names (the underwriting members).'
The writs would be issued against the ruling council of Lloyd's, the committee, and the administrative body of Lloyd's, the Corporation of the market.
According to Chethams, the claims that are to be lodged by the members will be based on allegations that there has been manifest fraud (both criminal and civil) and conspiracy to defraud 'on the part of the Society and Corporation of Lloyd's and others, including false accounting and that, consequently, a false market has existed within Lloyd's since as long ago as 1981 and perhaps earlier'.
Chethams has been instructed by a new Lloyd's fighting force of members, the Lloyd's Action Group for Restitution and Deposit Defence. Lloyd's hit out at the attack yesterday by the new body. 'We repudiate the mischievous and unfounded suggestions made by the Lloyd's Action Group. The chairman of Lloyd's, to which the Chethams letter has been addressed, is abroad.'
So far the new group headed by Clive Francis has raised up to pounds 75,000 in order to finance potential litigation.
The move comes as Lloyd's is seeking support for a key vote tomorrow among its members to allow companies rather than individuals to invest in its market.
The signs are that Lloyd's is set to win its crucial vote, even though members who are facing huge losses are making last-minute attempts to use their voting influence to force Lloyd's to meet their liabilities.
Mr Francis said he was in talks with other of the 37 action groups to link up with them and co-ordinate future action.
He said his group was the first one of its type not to directly sue managers of syndicates, into which the members of Lloyd's are grouped, but was the first one planning to sue Lloyd's itself.
Under Lloyd's own legislation the market is protected from suits for damages by a legal immunity unless members can demonstrate that the market has acted in bad faith.
So far no member of Lloyd's has successfully challenged this immunity.
Samuel Montagu, the merchant bank, has secured legally binding agreements with Lloyd's insurance syndicates to reserve about pounds 450m of underwriting capacity for its planned investment trust.Reuse content