U.S. ‘Names’ to Appeal Ruling Letting Lloyd’s Rescue Proceed

A group of U.S. investors in Lloyd’s of London plans to appeal a federal appellate decision allowing the insurance market to resume its $4.8-billion recovery plan, an attorney for the investors said Wednesday.

Stephen Hudson, who represents 93 U.S. investors who sued Lloyd’s, said he would seek a rehearing from the U.S. 4th Circuit Court of Appeals in Baltimore in an emergency motion to be filed today.

The motion will argue that the appeals panel exceeded its authority in allowing Lloyd’s to reinstate Wednesday’s deadline for U.S. investors to accept or reject the settlement plan. A lower court had ordered a two-month postponement of the deadline to give investors a chance to review financial records about the plan Lloyd’s was to release.

Lloyd’s discounted the appeal as “a desperate effort to resuscitate an expired lawsuit.”

“The court clearly acted within the scope of its authority,” Lloyd’s attorney Harvey Pitt said.

Lloyd’s was brought to the brink of ruin when it lost $12.4 billion in the five years ended in 1992, amid a flurry of claims for asbestos, pollution and natural disasters.

Many of the investors, known as Names, refused to pay, saying they were victimized by unscrupulous insiders at Lloyd’s. The Names were required to put all their personal assets on the line to back the insurance policies, and many went broke.

Lloyd’s is offering more than $4.8 billion to absorb some of the investors’ massive losses. But if the Names accept, they will have to give up the right to sue the market that many believe defrauded them.

The appeals panel ruled Tuesday that U.S. District Judge Robert Payne of Richmond, Va., should have allowed the lawsuit from U.S. investors to be tried in British court.

He cited an agreement signed by all Lloyd’s investors providing for British court resolution of all disputes.

Separately, Lloyd’s said Wednesday that 90% of its 34,000 investors, including two-thirds of its U.S. investors, have accepted the recovery package.

The Lloyd’s governing body is due to meet today to put a final deadline on acceptance.