US investors mull appeal of Lloyd 's decision .
Patricia Vowinkel
NEW YORK 1996-08-27
U.S. investors in troubled Lloyd 's of London were considering late on Tuesday whether to appeal a U.S. court decision in favour of Lloyd 's and pledged to continue pursuing other legal actions .
A U.S. appeals court on Tuesday gave Lloyd 's a reprieve , throwing out an injunction that the insurance giant said could have led to its collapse .
A lower court issued the injunction on Friday and ordered Lloyd 's to give investors , known as Names , more information before requiring them to decide whether to accept a settlement offer as part of a reorganisation plan .
" My prediction is that the Names will appeal , " said Kenneth Chiate , a U.S. Name and a chief negotiator for the American Names Association .
" At this point , it is a sufficiently important decision that I 'm confident that they will appeal , " he said . "
But to say that they definitely will would be premature until we determine what the exact basis for the court 's ruling is . "
Under the reorganisation plan , Lloyd 's plans to reinsure its massive liabilities into a new company called Equitas .
The arrangement calls for investors to make additional payments to fund Equitas but also provides them with 3.2 billion stg in compensation to help reduce their prior outstanding liabilities .
The Names had been scheduled to decide whether to accept or reject the offer by 1100 GMT Wednesday , but Lloyd 's chairman David Rowland said on Tuesday the offer would be extended .
At least eight U.S. states have still some form of litigation pending , said John Head , spokesman for the Association of Lloyd 's State Chairmen , a group representing U.S. Names .
" It goes without saying that we 're rather disappointed , " Head said of the decision by the U.S. Court of Appeals for the Fourth Circuit , sitting in Baltimore .
But , he said , " we still have hope that somebody is going to see our point of view in this . "
The Colorado attorney general told Lloyd 's last week it was considering a new legal action against the British insurance market , based on allegations of consumer fraud .
" We have notified them of our concerns and asked them to give us a response , " said Colorado attorney general Gale Norton .
Norton said she was concerned that the Lloyd 's agreement immunizes it from future litigation regarding Equitas and requires that all legal actions be heard outside of Colorado .
In addition , she said she was concerned the plan may not offer investors enough protection from additional , future liabilities .
Meanwhile , an appeal of a lawsuit filed by some 600 Names in California is still pending before the U.S. Court of Appeals for the Ninth Circuit , Chiate of the American Names Association said .
That lawsuit , which seeks rescision and restitution , was dismissed in a U.S. district court .
That case " is what I call the most significant alternate remedy for us , " Chiate said .
The individual Names , however , now must decide whether to accept Lloyd 's settlement offer or reject the offer and pursue litigation .
Chiate said he has advised Names that " they must make , individually , a risk benefit analysis . "
Rejection involved forfeiting the compensation offer and risking the possibility of owing Lloyd 's two to three times more than Lloyd 's is now willing to accept , he said .
But , in rejecting the offer , the Names would retain their rights to pursue litigation , he said .