Winding Up An ILS Vehicle Should Be As Seamless As Its Creation: Ocorian Law's Charleson

• Law Firm: Ocorian
• Subject Matter: Finance and Banking, Corporate/Commercial Law, Debt Capital Markets, Corporate and Company Law, Directors and Officers
• Author: Ocorian &nbsp
• Published date: 06 March 2023

Speed to market is a key characteristic of Bermuda's ILS market, but when setting up your ILS vehicle, it is also important to consider what happens at the end of its economic life, says Louise Charleson, Partner, Ocorian Law (Bermuda) Limited.

This article was originally published onArtemison 1 February 2023.(Author: Kane Wells)

In a recent interview with Artemis, Charleson, who acts as liquidator for solvent liquidations, noted that Bermuda is well known for its robust insurance infrastructure which facilitates the smooth establishment of ILS vehicles.

She suggested that the process at the end of an ILS entity's life should be equally as seamless.

Charleson said, "The simplest way to wind up an ILS entity is to proceed with a members' voluntary liquidation (MVL).

"To commence an MVL, the directors of a company must pass resolutions recommending to the members that the company is placed in liquidation and then authorise the execution and filing of the Declarations of Solvency with the Bermuda Registrar of Companies (ROC).

"Declarations of Solvency must be sworn by the majority of directors of a company confirming that the entity is in a position to pay its debts in full within a period of twelve months from the commencement of the winding up."

Charleson explained that members will then pass resolutions for the winding up of the company and the appointment of a liquidator.

She noted that where external legal advisors are instructed to assist with the MVL, the liquidator will typically be an individual from their liquidations team.

Once the liquidator has been appointed, their obligations are to conform to certain statutory procedures governed by the Companies Act 1981.

This includes advertising for creditors (a minimum of fourteen days' notice is required to be given), advising the ROC of his appointment, settling creditors' claims, distributing surplus assets, and calling a statutory final meeting for which one month's notice is required.

Charleson continued, "At the final general meeting, the Liquidator's Statement of Account is approved by the meeting and the Company is dissolved. In a straightforward liquidation, the...