Today Richards J handed down the judgment for his decision on 19 March 2025 to sanction the scheme of arrangement proposed by Reliance National Insurance Company (Europe) Limited (Reliance).
As to the general significance of the case, it is one of the few cases since British Aviation Insurance and The Scottish Lion in which there was a dispute as to the statutory majorities. The Court had to consider the standards by which that dispute was to be assessed. Following Dee Valley, the Court held that because the scheme meeting is a court meeting what mattered was compliance with the voting process set out in the convening order, rather than a final assessment of the disputed claims. That process allowed the chairperson to adopt the assessments of an independent vote assessor (IVA). The IVA had used a best estimate approach and had exercised his independent judgement to assign a voting value to each claim. All claims were referred to the IVA, and the IVA was not told the direction of the vote on any claim. Richards J was satisfied that the vote assessment was honest, not perverse, and not irrational. He also held that there was no basis on which it could be said that there had been substantial (indeed, any) non-compliance with the approach directed in the convening order.
As to the insurance specific significance, the scheme arose out of a Part VII Transfer that had, unfortunately and without fault, resulted in a situation in which policyholders’ claims against the transferee entity in run off were unlikely to be met in full. In response, the scheme proposed a means of adjudicating those claims for distribution purposes without litigation and with a view to the payment of those claims in full (because of the reduced costs of distribution without litigation), albeit that outcome was not guaranteed. There was nothing inherently unfair in the scheme distribution and claim assessment process, and the relevant alternative of administration, including potential litigation claims that might be pursued by the company in administration (and thereby in theory increase its assets), had been adequately explained in the explanatory statement. Against that background, policyholders had voted for the scheme, and it was an appropriate scheme for the Court to sanction.
Read the full judgment here.
Adam Al-Attar KC acted for Reliance, instructed by Clifford Chance LLP (Philip Hertz, Jeanette Best, Emma Buchanan)
