In re Ambassador Insurance Company, Inc.

This appeal stemmed from the liquidation of Ambassador Insurance Company, Inc., a property and casualty insurance company incorporated in Vermont. Appellant National Indemnity Company (NICO), assignee to two claims under excess liability policies issued by Ambassador, appealed a superior court order setting a deadline by which all policyholders must file final proofs of claim. NICO argued that the final claim date did not strike a reasonable balance between the need to wind up the liquidation and the rights of policyholders with unliquidated claims. NICO contended that because Ambassador was then solvent, the liquidator could continue to cover all costs of administration in addition to paying claims and immediate closure of the liquidation was therefore not warranted. Closure at this time, NICO argued, would deny payment to higher-priority creditors in favor of lower-priority creditors, contrary to the policy in insolvency proceedings of protecting the rights of policyholders. The primary issue on appeal is not whether the trial court had the legal authority to set a final claim date; the question was whether, given the unique circumstances of this case, the trial court erred in setting December 31, 2013 as a final date for submission of proofs of liquidated claims. Upon review, the Supreme Court concluded that the trial court's final claim date indeed did not strike a "reasonable balance between the expeditious completion of the liquidation and the protection of unliquidated and undetermined claims." When determining whether a final claim date achieves this reasonable balance, courts should consider, among other factors: (1) the company's remaining assets; (2) the nature and amount of its remaining liabilities; (3) the administration costs of the estate; and (4) the extent to which delay in termination of the liquidation proceedings results in a delay of full payment to priority claim holders. Here, these factors weighed against the final claim date of December 31, 2013 set by the trial court. View "In re Ambassador Insurance Company, Inc." on Justia Law