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John Winter, chief executive of Ruxley Ventures

Recent reports of the death of solvent schemes are an exaggeration. Indeed, the ruling on the BAIC scheme sanction should be seen as positive on a number of fronts.

First, the decision confirms the robustness of the court-based approval system for solvent schemes. No one can now doubt the power of creditors to take action if they are unhappy with a scheme’s proposals.

Second, Mr Justice Lewison found nothing objectionable in core scheme mechanics such as steps taken to notify creditors, the process for adjudicating disputes or agreements with creditors in relation to their votes.

However, his comments have, once again, emphasised the importance of expert execution.

As Ruxley has previously stated, a solvent scheme is simply the legal framework which underpins an agreement to close discontinued books of business in a suitably fair and transparent manner.

To make that process work in practice critical activities prior to a scheme's drafting include:

• Creation of up to date policyholder records;
• Widespread and detailed policyholder consultation to identify concerns; and
• Analysis and appraisal of each policyholder’s potential and actual claims.

August/September 2005

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