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PART II
Cross‐Border Run‐Offs and Receiverships
A. United States Assistance to Non‐U.S. Re/Insurance Run‐Off, Liquidation,
Administration
1. Introduction
Selinda A. Melnik
Edwards Angell Palmer & Dodge LLP
Non‐U.S. re/insurance companies involved in run‐off, liquidation, administration and the like outside of the
United States often have assets or other exposure in the U.S. which must be protected to ensure effective
implementation of the non‐U.S. endeavor. Typically, the representative of the non‐U.S. re/insurer seeks to
obtain a stay of acts within the United States against the re/insurer or its assets and the transfer of U.S. sited
assets or their proceeds back to the foreign jurisdiction to enable claims resolution and distribution of value to
claimants to occur within, and under the laws governing, the foreign proceeding.
Absent jurisdictional access to assistance via U.S. state re/insurance proceedings, the representative of the
non‐U.S. re/insurer must look to U.S. federal law. If the non‐U.S. run‐off, liquidation or administration meets
the definition of a “foreign proceeding” under the U.S. Bankruptcy Code, the representative of that “foreign
proceeding” may not seek relief from any court within the United States ~ municipal, state or federal ~ under
any law without first seeking recognition of the “foreign proceeding” via Chapter 15 of the U.S. Bankruptcy
Code. Bankruptcy Code Chapter 15 recognition of the “foreign proceeding” is a jurisdictional predicate to relief
in the United States in aid of that proceeding. It effectively is an “entry visa” required to obtain assistance
from any U.S. court in aid of a “foreign proceeding.”
Non‐U.S. re/insurers engaged in such business in the United States are not eligible to be debtors in full plenary
proceedings commenced in the United States under the U.S. Bankruptcy Code, such as Chapter 7 liquidation or
Chapter 11 reorganization proceedings. 11 U.S.C. §109(b)(3)(a). Moreover, Chapter 15 ancillary recognition and
relief in aid of non‐U.S. proceedings generally is not available to non‐U.S. proceedings concerning the types of
entities that otherwise would not be eligible to be debtors under the U.S. Bankruptcy Code (in the main,
entities regulated under U.S. State or Federal law, such as banks and insurers). Thus, absent some exception, a
non‐U.S. proceeding involving a re/insurer would not be eligible for Chapter 15 recognition and relief in the
United States. However, Chapter 15 subsection 1501(c)(1) expressly excepts from these otherwise excluded
entities non‐U.S. proceedings involving non‐U.S. insurance companies, which Congress has determined “are
eligible for recognition and relief under Chapter 15 as they had been under [now‐repealed] section 304.” 1
The eligibility of foreign insurance companies for Chapter 15 relief is not a departure from prior law. It is both a
continuation of current law and effective codification of a developed body of case law generated under former
section 304. 2 Chapter 15 subsection 1501(d), however, carves out from the relief the U.S. bankruptcy court may
grant in aid of a proceeding involving a foreign insurer under Chapter 15 any relief respecting any deposit,
escrow, trust fund or the like posted by a foreign insurer under State insurance law or regulation for the
benefit of policyholders in the United States.
U.S. Bankruptcy Code Chapter 15 became effective October 17, 2005, at which time it replaced former single
section 304 of the U.S. Bankruptcy Code. In the ensuing three years plus, more than 260 single and jointly
administered cases have been brought under Chapter 15, eighteen (18) of which have sought relief in aid of
non‐U.S. re/insurers, with one ultimately withdrawn following decision to not proceed with the UK scheme of
arrangement (NRG Victory Reinsurance Ltd). Of the remaining seventeen (17) re/insurance related Chapter 15
cases, thirteen (13) have involved non‐U.S. run‐off schemes of arrangement, three (3) have involved liquidation
or winding‐up proceedings, and one (1) was filed in aid of a UK administration proceeding.
A chart setting forth pertinent information about the re/insurance related Chapter 15 cases filed through the
end of February 2009 comprises Part B of this Chapter. Part C briefly explores the purposes of Chapter 15 and
1 House Report No. 109‐31, Pt. 1, 109 th Cong., 1 st Sess. (2005) (hereinafter “House Report”) at 107.
2 See generally In re Tri‐Continental Exchange, Ltd., 349 B.R. 627 632 (Bankr. E.D. Cal. 2006).