On Friday, the U.S. Senate voted 79-to-18 to remove a provision in the pending Bankruptcy Reform Bill that would have prevented Lloyd’s of London from pursuing a number of American “Names” for debts totaling around $50 million.
The controversial provision, which was opposed by the Secretary of State Colin Powell and the Bush administration, would have given protection to those U.S. Names who have long alleged that they were the victims of fraud and misrepresentation by Lloyd’s representatives when they became investors in the ’70s and ’80s.
Lloyd’s has been successful in the lawsuits it has brought for collection of the debts in Britain, most recently in the Jaffray case, decided last year, and these judgments have been upheld by U.S. Courts. U.S. Names had sought to impose a restriction that these debts were uncollectable unless validated in an American Court.
The Senate vote to strike the provision from the bill is a significant victory for Lloyd’s. It opens the way to finally settle the cases which have been dragging on since 1996 when Lloyd’s first offered its Recovery and Renewal plan to Names in an attempt to compromise the large amounts owed as a result of asbestos and environmental claims. Although 95 percent of the Names accepted the plan, a number in the U.S. and Britain have refused, leading to the present litigation.
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