The U.K. ‘s Chester Street Insurance, formerly known as Iron Trades Holdings, has been forced to seek bankruptcy protection following an increasing number of claims for damages from asbestosis filed against it. Iron Trades, as the name suggests, specialized in workers’ compensation insurance for the steel and shipbuilding industry.
Most of the policies in question were written before 1990, when the severe health problems caused by exposure to asbestos, widely used in the building trades, became known. Iron Trades reorganized last year, and sold its ongoing business to QBE International. The remaining claims became the responsibility of Chester Street, and have now reached levels that will eventually exceed its £200 million ($ 297 million) in assets.
PwC, a professional services company that was appointed as a provisional liquidator last Wednesday, hopes to reach a compromise settlement, that would allow at least partial payment of the claims, and is in negotiations with employers and legal representatives of asbestosis victims to try to reach an agreement. The stakes are high for all concerned.
If the creditors approve a compromise, some payments will be made, and Chester Street could emerge from provisional liquidation by the end of February. If no agreement were reached, a definitive bankruptcy filing would presumably follow, which could delay payments to victims for years.
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