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. Last Updated: 07/27/2016

Lloyd's Appeals Restructuring Ruling

LONDON -- Lloyd's of London is appealing a U.S. District Court ruling in Virginia that Lloyd's leaders say threatens the insurance market's restructuring plan.


Lloyd's said Sunday that 75 percent of its investors who lost billions in a five-year run of disasters have approved the plan, which it said is crucial for the insurance market's survival.


Friday's ruling by U.S. District Judge Robert Payne in Richmond, Virginia, poses big obstacles because it would let 3,000 U.S. investors delay their decision beyond this week's deadline for Lloyd's to show the British government it is solvent.


Payne's ruling gives the U.S. investors until Oct. 30 to accept or reject the restructuring plan.


The ruling also says that Lloyd's must give the U.S. investors additional financial details before Oct. 30 to meet rules of the U.S. Securities and Exchange Commission.


Lloyd's argues that doing that would be an immensely complicated task. Its appeal will be heard Tuesday before the U.S. Fourth Circuit Court of Appeals in Baltimore.


Lloyd's Chairman David Rowland said Sunday that he was confident that an "overwhelming majority" of the 34,000 investors, known as "names," will accept the restructuring plan by noon Wednesday.


For Lloyd's to succeed, it needs to win the support of an unspecified number of names who can come up with ?360 million ($558 million) in fresh cash and it needs to halt litigation by substantial numbers of names.


Lloyd's said Sunday it had not calculated whether the 75 percent of names who signed up as of noon Saturday will suffice for the plan to work.


"We haven't split out what each name who has accepted is worth," spokesman William Clutterbuck said. "And we've got Sunday, Monday, Tuesday and Wednesday to go."


Lloyd's was hit by losses of ?8 million ($12.4 billion) from asbestos lawsuits and natural disasters in the years 1988 to 1992.


Many of the names refused to pay their claims, saying they were victimized by unscrupulous insiders at the fabled insurance market. Others went broke because names are exposed to unlimited liability.


Lloyd's is offering the investors a package worth ?3.1 billion to put an end all their debts. In return they must agree not to sue Lloyd's.


Lloyd's has until the end of the month to show the British government it has enough cash to stay in business.


If not, British regulations would require the closure of Lloyd's, although the Department of Trade and Industry seems to recognize the case is unprecedented and has not said precisely what it would do.