Strand, London, WC2A 2LL
B e f o r e :
| IN THE MATTER OF THE BRITISH AVIATION INSURANCE COMPANY LIMITED
Mr. Richard Sheldon QC & Ms Hilary Stonefrost (instructed by Covington & Burling) for the Opposing Creditors
Miss. Rosalind Nicholson (instructed by Edwin Coe) for United Technologies Corporation & Ors
Hearing dates: 7th, 11th, & 13th July 2005
Crown Copyright ©
|Pollution and asbestos claims||5|
|The meeting is summoned||9|
|The opposing policyholders and their objections||11|
|The opposing policyholders||11|
|The grounds of opposition||11|
|The legal framework||13|
|The statutory provisions||13|
|The first stage: summoning the meeting||14|
|What is a class?||15|
|The second stage: the scheme meeting||18|
|The third stage: sanctioning the scheme||19|
|Was adequate notice of the first-stage application given?||21|
|Were the classes of creditors correctly identified?||22|
|Was adequate notice of the second stage (Scheme Meeting) given?||27|
|Did the explanatory memorandum adequately explain the contents of the scheme?||27|
|Was the meeting properly and fairly conducted?||28|
|Did the votes cast adequately represent the views of the creditors?||31|
|Treatment of IBNR claims||33|
|Are the terms of the scheme fair?||33|
|The Bar Date||34|
|Reversion to run off||35|
|Should I, as a matter of discretion, sanction the scheme?||37|
|Benefits of the scheme||37|
Mr. Justice Lewison:
The Company and its business
|Claim type||Estimated liability before reinsurance (£m)||% of total|
|Hull and Liability||2.6||4.86|
|Health hazard and other||0.7||1.31|
i) "unsettled paid claims". These are losses for which the Company would be liable to indemnify a policyholder under an insurance or reinsurance contract, where the amount of the claim has already been ascertained, and the liabilities both of the policyholder to the claimant and of the Company to the policyholder have been established;
ii) "outstanding losses". These are claims that have been reported to a policyholder and for which the Company may be liable to indemnify the policyholder under a contract of insurance or reinsurance, but where there is not yet any established liability; and neither the quantum of the claim nor the Company's liability to indemnify the policyholder has yet been agreed; and
iii) "incurred but not reported" claims ("IBNR claims"). These are potential claims where the event giving rise to the policyholder's liability (e.g. exposure to asbestos) has already taken place, but where no claim has yet been made against the policyholder or reported to the Company.
Pollution and asbestos claims
"Estimation of asbestos related IBNR claims involves a valuation of future contingent liabilities and is, therefore, inherently uncertain. The degree of uncertainty will depend upon the impact of various external factors and I accept that wide variations might be experienced. However, the existence of such uncertainty does not render any estimation unusable, unreasonable or unfair. Where the estimation is based on legitimate assumptions which are fair and reasonable, and can be supported by evidence, fair and reasonable conclusions can be drawn. It is accepted that, with the benefit of hindsight, an estimation may be shown to undervalue or overvalue a liability."
i) identify each insurance contract, together with broker details, under or in relation to which its claim in relation to a Scheme Liability arises;
ii) specify the amount of each Scheme Liability arising under or in relation to each insurance contract;
iii) supply documents and other information in accordance with the Estimation Methodology; identify and specify details of any security interest, letter of credit, trust, set-off or counter-claim and any other sums owed to the Company which will be set-off under the Scheme in reduction of the Scheme Liabilities of that Scheme Creditor.
The meeting is summoned
i) the Company do convene a meeting of its Scheme Creditors, to be held on 15 March 2005 at 2.30pm at the offices of Herbert Smith, for the purpose of considering and, if thought fit, approving (with or without modification) the Scheme;
ii) the Scheme Documentation (comprising a covering letter, the Notice of Meeting, the short-form Explanatory Statement and the Proxy and Voting Forms) be sent to all Scheme Creditors, not less than 45 days before the Scheme Meeting;
iii) advertisements be placed in 9 publications, notifying Scheme Creditors of the Scheme Meeting and the availability of the Scheme Documentation; and
iv) the voting procedure proposed by the Company be approved. The proposal (incorporated into the order) was that Scheme Creditors would be invited to provide supporting evidence for claims estimation which would enable the Company to consider the reasonableness of claims for voting purposes. The order incorporated the description of the process for resolving disputes in the Company's evidence, which was:
"Scheme Creditors whose claims are disputed by the Company will still be eligible to vote at the Scheme Meeting. The decision as to the value to be placed on such claims for voting purposes will be made by the Chairman of the Scheme Meeting. In the event that the company does not agree with a Scheme Creditor's estimate of the value of its claim, the Chairman of the Scheme Meeting will consider whether or not such estimate is reasonable before admitting it for voting purposes."
i) those which contained errors; and
ii) those which were based on estimated claims, which the Company considered to be unreasonable for voting purposes.
|AGAINST||No.||Value (£)||No.||Value (£)|
i) Those creditors who voted consisted of 38 insureds and 34 reinsureds;
ii) 11 of the insureds voted for the scheme and 27 against. Of the 34 reinsureds, 33 voted in favour of the scheme and one against.
iii) Of the insureds who voted for the scheme, one of the largest claimants (United Airlines) had no IBNR claim; and two (Honeywell and Viacom) did not split their claims between accrued claims and IBNR claims, but were admitted to vote their unsplit claims in full;
iv) 16 of the reinsureds (all of whom voted in favour of the scheme) are also reinsurers of the Company;
v) the majority of reinsureds had no or only modest IBNR claims;
vi) those insureds who had IBNR claims, and who voted for the scheme, were (with two exceptions) admitted to vote those claims in full;
vii) those insureds with IBNR claims, and who voted against the scheme, were admitted to vote substantially reduced IBNR claims, and in six cases their IBNR claims were disallowed completely.
The opposing policyholders and their objections
The opposing policyholders
The grounds of opposition
i) The Company has identified addresses for only some one third of its creditors to whom notices have been sent.
ii) Even where the addresses have been identified, addresses used were out of date and notices did not properly specify the intended recipient.
iii) As regards the majority of the creditors who were not sent notices, there are potentially thousands of creditors worldwide who will have their contractual rights affected and in all likelihood extinguished without their knowledge if the Scheme comes into effect.
iv) The advertisements placed were wholly inadequate.
i) The Company's assertion that all creditors will be paid 'in full' is misleading.
ii) The statement that the proposed Scheme 'will establish a method of valuation' is misleading.
iii) The provision entitling the Company in its absolute discretion to revert to run-off is inadequately explained and the statement that one of the advantages to creditors of the Proposed Scheme would be 'certainty and finality' is wrong.
iv) The risk that the proposed Scheme might not be effective in the United States if the orders sought under s 304 of the US Bankruptcy Code were not obtained is inadequately explained.
v) The disadvantages of the proposed Scheme are inadequately explained.
vi) The notice of the initial hearing for directions did not give any information about the date or place of the hearing, failed adequately to inform Scheme Creditors of the consequences to them of the proposed Scheme or the importance of that hearing and failed to give Scheme Creditors adequate time to respond.
i) The claims of opposing creditors for voting purposes were incorrectly adjusted downwards (and the Company has yet to respond to the opposing creditors' objections to the downward adjustments).
ii) Those who voted in favour of the proposed Scheme had special interests which were not representative of those in the position of the creditors who opposed the proposed Scheme.
i) The Company, which is solvent and able to meet its contractual obligations as they fall due, would plainly benefit from the proposed Scheme: it would achieve certainty and finality by permanently extinguishing its contractual obligations to pay its policyholders' long tail liabilities thereby enabling the surplus to be released to its shareholder, Royal & Sun Alliance, to the detriment of Scheme Creditors.
ii) The insurance and reinsurance creditors of the Company also have an interest in the extinction of long tail liabilities.
iii) By contrast, the effect of the proposed solvent Scheme on the Opposing Creditors and other long tail policyholders is that their valuable and irreplaceable insurance cover would be extinguished at a time when asbestos and other latent injury claims under the policies are beginning to materialise. The proposed Scheme involves the re-writing of contracts freely entered into by the Company and the withdrawal of the cover the policyholders bargained for. It forces upon such policyholders a commutation of their policies without their agreement and on terms that are more favourable to the Company than could be achieved by negotiation. Contrary to the Company's assertion, it is impossible to ascertain whether policyholders with long tail claims such as those of the Opposing Creditors will be paid 'in full' under the proposed Scheme.
iv) There is no methodology set out in the proposed Scheme for valuing claims, and in particular IBNR claims.
v) The provisions of the proposed Scheme – and in particular the scheme adjudication process – unfairly deprive the Scheme Creditors of their rights of access to the courts; of having their rights determined by an independent and impartial tribunal; and deprive the policyholders of the forum to which they are contractually entitled to have disputes determined.
vi) The process of the administration of the proposed Scheme is shrouded in secrecy and cannot be effectively policed.
vii) There are provisions of the proposed Scheme – such as the Company's right in its absolute discretion to revert to run-off, the bar date, the Company's ability to continue to commute claims, the Company's ability to make early payments and the Scheme Adjudicator's ability to impose costs on creditors – which are one-sided and are likely to result in the unfair treatment of creditors.
The legal framework
The statutory provisions
"(1) Where a compromise or arrangement is proposed between a company and its creditors, or any class of them, or between the company and its members, or any class of them, the court may on the application of the company or any creditor or member of it or, in the case of a company being wound up, or an administration order being in force in relation to a company, of the liquidator or administrator, order a meeting of the creditors or class of creditors, or of the members of the company or class of members (as the case may be), to be summoned in such manner as the court directs.
(2) If a majority in number representing three-fourths in value of the creditors of class or creditors or members or class of members (as the case may be), present and voting either in person or by proxy at the meeting, agree to any compromise or arrangement, the compromise or arrangement, if sanctioned by the court, is binding on all creditors or the class of creditors or on the members or class of members (as the case may be), and also on the company or, in the case of a company in the course of being wound up, on the liquidator and contributories of the company"
The first stage: summoning the meeting
" 4. It is the responsibility of the applicant by evidence in support of the application or otherwise to draw to the attention of the court as soon as possible any issue which may arise as to the constitution of meetings of creditors or which otherwise affect the conduct of those meetings (creditor issues). For this purpose unless there are good reasons for not doing so the applicant should take all steps reasonably open to it to notify any person affected by the scheme that it is being promoted, the purpose which the scheme is designed to achieve, the meetings of creditors which the applicant considers will be required and their composition.
5. In considering whether or not to order meetings of creditors (a meetings order) the court will consider whether more than one meeting of creditors is required and if so what is the appropriate composition of those meetings.
6. Where a creditor issue has been drawn to the attention of the court it will also consider whether to give directions for the resolution of that issue including if necessary directions for the postponement of meetings of creditors until that resolution has been achieved.
7. Directions for the resolution of creditor issues may include orders giving anyone affected by a meetings order a limited time in which to apply to vary or discharge that order with the creditors meetings to take place in default of any such application within the time prescribed. While creditors who consider that they have been unfairly treated will still be able to appear and raise objections on the hearing of the petition to sanction the scheme, the court will expect them to show good reason why they did not raise a creditor issue at an earlier stage."
What is a class?
"[T]he relevant question at the outset is: between whom is it proposed that a compromise or arrangement is to be made? Are the rights of those who are to be affected by the scheme proposed such that the scheme can be seen as a single arrangement; or ought the scheme to be regarded, on a true analysis, as a number of linked arrangements? The question may be easy to state; but, as the cases show, it is not always easy to answer. "
"On its facts the case is authority for the proposition that, in relation to the terms of the scheme in that case, a person with an existing right to set off moneys due to him under a policy which had matured against moneys owed by him to the company was not in the same class of creditors as those who had no such right. It may well be said, also, that this court would have found, had it been necessary for it to do so, that, the terms of the scheme in that case did lead to the conclusion that those whose policies had matured constituted a different class of creditors from those whose policies had not matured; but that is because the terms of the scheme substituted for rights under policies which had matured during the life of the policyholder the rights which those policyholders would have had on death if the policies had not matured. "
"But it will not necessarily follow, in every case, that the treatment under the scheme of vested and contingent rights, or the rights under matured and current policies, will be so dissimilar that the holders of those rights must be regarded as persons in different classes in the context of the question 'with whom is the compromise or arrangement made'. In each case the answer to that question will depend upon analysis (i) of the rights which are to be released or varied under the scheme and (ii) of the new rights (if any) which the scheme gives, by way of compromise or arrangement, to those whose rights are to be released or varied. It is in the light of that analysis that the test formulated by Bowen LJ in order to determine which creditors fall into a separate class – that is to say, that a class 'must be confined to those persons whose rights are not so dissimilar as to make it impossible for them to consult together with a view to their common interest' – has to be applied."
"(1) It is the responsibility of the company putting forward the Scheme to decide whether to summon a single meeting or more than one meeting. If the meeting or meetings are improperly constituted, objection should be taken on the application for sanction and the company bears the risk that the application will be dismissed.
(2) Persons whose rights are so dissimilar that they cannot sensibly consult together with a view to their common interest must be given separate meetings. Persons whose rights are sufficiently similar that they can consult together with a view to their common interest should be summoned to a single meeting.
(3) The test is based on similarity or dissimilarity of legal rights against the company, not on similarity or dissimilarity of interests not derived from such legal rights. The fact that individuals may hold divergent views based on their private interests not derived from their legal rights against the company is not a ground for calling separate meetings.
(4) The question is whether the rights which are to be released or varied under the Scheme or the new rights which the Scheme gives in their place are so different that the Scheme must be treated as a compromise or arrangement with more than one class.
(5) The Court has no jurisdiction to sanction a Scheme which does not have the approval of the requisite majority of creditors voting at meetings properly constituted in accordance with these principles. Even if it has jurisdiction to sanction a Scheme, however, the Court is not bound to do so.
(6) The Court will decline to sanction a Scheme unless it is satisfied, not only that the meetings were properly constituted and that the proposals were approved by the requisite majorities, but that the result of each meeting fairly reflected the views of the creditors concerned. To this end it may discount or disregard altogether the votes of those who, though entitled to vote at a meeting as a member of the class concerned, have such personal or special interests in supporting the proposals that their views cannot be regarded as fairly representative of the class in question."
The second stage: the scheme meeting
"That Act says that there shall be a power in the majority to bind the minority. But that majority must be a majority of creditors of each company which is compromising, and in order to enable the majority to bind the minority the Court must be satisfied that there is a meeting of creditors the amount of whose debts can be estimated, and that there are three-fourths of the creditors who have assented, before it will interfere to enforce that which the large majority think the most beneficial way for them to get their claims satisfied-- merely applying to a winding-up in this Court the same principles as are applied in Bankruptcy to dealings between a bankrupt and his creditors. But here the Court really has no data by which it can be at all ascertained what the claims of the creditors are."
The third stage: sanctioning the scheme
"[T]he court is not bound by the decision of the meeting. A favourable resolution at the meeting represents a threshold which must be surmounted before the sanction of the court can be sought. But if the court is satisfied that the meeting is unrepresentative, or that those voting at the meeting have done so with a special interest to promote which differs from the interest of the ordinary independent and objective shareholder, then the vote in favour of the resolution is not to be given effect by the sanction of the court."
"It makes the majority of the creditors or of a class of creditors bind the minority; it exercises a most formidable compulsion upon dissentient, or would-be dissentient, creditors; and it therefore requires to be construed with care, so as not to place in the hands of some of the creditors the means and opportunity of forcing dissentients to do that which it is unreasonable to require them to do, or of making a mere jest of the interests of the minority."
"We start with this, that the creditors ought to be paid 20s. in the pound. If it is there for them to have, they ought to have it at the expense of the shareholders; there is no question at all about that. But can they get it? If they cannot get it, then it becomes necessary to consider and decide upon some alternative scheme for giving them less than that to which they are entitled.
But I do not think that it is just to say that this is a mere scheme to resuscitate the bank and not pay the creditors. If I thought that was the scheme, I should negative it without the slightest hesitation; but I think the true view of it is this, that it is a scheme for paying the creditors by resuscitating the bank, and I do not believe the creditors can get paid in any other way."
"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 their commercial advantage than the court can be. I do not say it is conclusive, because there might be some blot on 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 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 so, in my judgment, unless something is brought to the attention of the court to show that there has been some material oversight or miscarriage."
"the arrangement is such as an intelligent and honest man, a member of the class concerned and acting in respect of his interest, might reasonably approve."
Was adequate notice of the first-stage application given?
Were the classes of creditors correctly identified?
i) All the Scheme Creditors are creditors under contracts of insurance and reinsurance entered into by the Company.
ii) It follows that they all have similar rights against the Company arising out of claims in respect of the insurance and reinsurance policies.
iii) All Scheme Creditors are to be treated equally under the terms of the Scheme.
iv) Whilst it is true to say that the impact of the early valuation and payment process will vary depending upon the number and quality of the contingencies that exist in relation to each claim and that the largest number and most speculative of contingencies will arise in relation to IBNR claims, the variations in impact as between all Scheme Creditors will be infinite and impossible to quantify in advance of the claims actually arising.
v) Moreover, depending on whether the estimated contingencies ever arise, the impact of the early valuation process on a particular creditor may be either beneficial or detrimental. It is again impossible to know in advance of the contingencies actually arising which it will be.
vi) The vast majority of Scheme Creditors, given that the policies all relate to long tail business that has been in run-off, will have (at least potentially) IBNR claims. Mr Dempsey's evidence is that there are approximately 400 policyholders who have "actual or pending" claims against the Company. (I was told that the phrase "actual or pending" claims included IBNR claims, although this is not immediately apparent from the language. It contrasts with Mr Cracknell's evidence that there are 459 policyholders with "current" claims. It seems to me that Mr Dempsey has understated the number of claims by 59, and must have been referring to the same claims that Mr Cracknell described as "current". Moreover, the very nature of an IBNR claim, as Mr Sheldon pointed out, is that it has not yet been reported to insurers.) Mr Dempsey also says that of: "all the Scheme Creditors whose votes were taken into account at the Scheme Meeting by the Chairman, I believe that all such Scheme Creditors have or could have IBNR claims". The nature of the policies written is such that, on any view, many of the Scheme Creditors will have both IBNR claims and non-IBNR claims. The mere fact that a Scheme Creditor has submitted one or more claims already is no indicator that it will not submit claims in the future. This substantial overlap between Scheme Creditors with actual and potential claims makes it impossible, in practice, to identify cleanly a separate "class" of Scheme Creditors with potential claims from those with actual claims. Further, the fact that most Scheme Creditors fall into both categories emphasises the fact that they are capable of consulting together in their common interest.
vii) Accordingly, notwithstanding the different impact the early valuation process might have on different types of Scheme Claim, this is insufficient to render the Scheme Creditors unable to consult together with a view to their common interest, given the features of the Scheme Claims and the treatment of them, that are shared by all Scheme Creditors.
Was adequate notice of the second stage (Scheme Meeting) given?
Did the explanatory memorandum adequately explain the contents of the scheme?
Was the meeting properly and fairly conducted?
i) The allocation period over which claims were spread was unreasonable. The opposing creditors say that under the law of Ohio, which governs the policies, the insured is entitled to an "all sums" basis of allocation. This principle holds that each policy in effect from the time of the allegedly harmful occurrence until the manifestation of the illness covers the entirety of the insured's loss. The decision not to apply this principle to the IBNR claims meant that it was assumed that the opposing creditors would receive contribution from multiple insurers, whereas the "all sums" doctrine places that burden on insurers. It seems that the Company's current position is that the "all sums" doctrine only applies to liability that has been determined by a court, and does not govern a settlement or its analogue, namely a payment under a scheme of arrangement. I confess that I do not follow the logic of the Company's position, since the object of the scheme is to determine the Company's legal liability to each policyholder, and that must involve an attempt to predict what would happen if disputes ended up in court. But even if the Company's position is correct, it does not follow that the opposing creditors' claim was unreasonable: merely that it was wrong. The legal opinion exhibited in support of the Company's position does not go so far as to say that the opposing creditors' view is untenable.
ii) Some of the opposing creditors, having no claims history of their own, relied on the claims history and estimates for associated companies in estimating IBNR claims. The Company rejected these claims as being unreliable. However, although the Company rejected these claims for voting purposes, and in most cases (although not all) placed a nominal value on them, it says that claims based on precisely the same material may be admitted in order to support a claim under the scheme. This is Catch-22. One of the opposing creditors' complaints about the scheme is that the estimation of IBNR claims is uncertain and unreliable. When they wish to deploy their IBNR claims in voting against the scheme, the Company and the Chairman reject their claims on the ground that they are uncertain and unreliable. Yet if the scheme is sanctioned, they will be permitted to present their IBNR claims on the basis of the self-same or similar material, which has already been castigated as uncertain and unreliable.
i) Two companies (Eagle Star Insurance Company and Dowa Fire and Marine) submitted claims; but the chairman considered that, taking set-off into account, they were likely to be net debtors of the Company; and not creditors at all. Nevertheless the Chairman admitted them to vote, although he placed a nil value on their claims. Both voted in favour of the scheme. The effect of this is that these two companies counted in the numerical majority of creditors, but not in the majority by value. Mr Sheldon submitted that once the chairman had formed the view that they were not Scheme Creditors at all, he should not have admitted their votes. However, Mr Moss retorted that the Chairman's report went no further than to say that after the application of future set-off these two companies were likely to be net debtors of the Company. At the date of the scheme meeting, they were (or at least were potentially) net creditors of the company. One of the Chairman's functions was to determine whether a person who claimed to be a Scheme Creditor should be allowed to vote at all. The Chairman decided that these two companies should be allowed to vote; but with a value of $1 attributed to their claims. This was not a perverse decision and was within the Chairman's remit. I agree.
ii) Two other companies (Royal Indemnity Company and Sea Insurance Company) were admitted to vote with claims of $25,000 and $79,696 respectively. Both these companies are subsidiaries of Royal & Sun Alliance Insurance Group plc, which is the majority shareholder of the company. Mr Sheldon submitted that although these two companies did not form a separate class of creditor, nevertheless since their parent stood to receive a substantial return of capital in the event of the outcome of the scheme conforming to expectations, their votes should be discounted. I agree that the special interest of these companies is something that I can and should take into account.
Did the votes cast adequately represent the views of the creditors?
Treatment of IBNR claims
Are the terms of the scheme fair?
The Bar Date
i) The Scheme Adjudicator's function is to determine a formulated dispute between a Scheme Creditor and the Scheme Manager, rather than to arrive at his own independent estimation of the value of a claim;
ii) Matters within the remit of the Scheme Adjudicator include matters of construction of documents and other legal issues, including issues of pure law (e.g. the application of the Ohio "all sums" doctrine), which are properly the subject of an arbitration, but which cannot be the subject of a binding expert determination;
iii) The scheme envisages that the Scheme Adjudicator will receive evidence and legal submissions, which is the hallmark of an arbitration;
iv) The terms of the scheme appear to preclude any action against the Scheme Adjudicator for negligence and, he submits, preclude any such action even if the Scheme Adjudicator acts dishonestly.
Reversion to run off
Should I, as a matter of discretion, sanction the scheme?
Benefits of the scheme
i) The run-off of the Company's business would, apart from the scheme, not be expected to be completed for many years.
ii) The Scheme will save the very substantial costs which would be incurred by continuing to run off the business over many years.
iii) Under the Scheme all Scheme Creditors will be paid earlier than would otherwise be the case.
iv) Scheme Creditors will have the benefit of a simple independent out of court dispute resolution mechanism.
v) Scheme Creditors will not run the risk of future insolvency if the run-off turns out to be disastrous.
i) The benefit of an early conclusion of the run-off seems to me to be a benefit which enures largely to the Company. A creditor who wishes to compound the Company's liabilities to him is free to do so in the absence of the scheme. A creditor who wishes to receive the indemnity which he was promised gains no advantage from the early conclusion of run-off;
ii) The saving in costs is a benefit that enures entirely to the Company. There is no suggestion that its assets are insufficient both to meet its liabilities and to pay the administrative costs of run-off;
iii) Early payment is, I accept, a benefit to creditors, but it has to be balanced against the fact that they will not be indemnified but will be paid an estimate of liability;
iv) The availability of the dispute resolution procedure is largely necessitated by the scheme itself. If the scheme is not sanctioned, the dispute resolution procedure becomes largely unnecessary;
v) The prospect of these shareholders allowing their subsidiary to go into insolvent liquidation is, on the evidence, no more than a remote and theoretical possibility.
i) The votes allowed to be cast at the scheme meeting did not fairly represent the creditors (and in particular the direct insureds) with substantial IBNR claims;
ii) The Estimation Methodology does not provide a clear basis for treating all creditors alike, and results in uncertainty;
iii) The Company's power to revert to run-off is not circumscribed;
iv) The supposed benefits of the scheme are largely benefits to the Company and its shareholders; or are brought into existence by the exigencies of the scheme itself.