Quinn Insurance court battle with Regulator adjourned
The Financial Regulator's application to have two joint administrators to the Quinn Insurance group confirmed by the High Court has been adjourned for a week.
Today at the High Court John Hennessy SC for the Regulator told the President of the High Court Mr Justice Nicholas Kearns that his client was seeking an adjournment because it wished to respond to an affidavit filed on behalf of the company.
Last month Paul McCann and Michael McAteer of Grant Thornton were appointed as joint provisional administrators to Quinn Insurance Ltd, Dublin Road, Cavan following an ex-parte application by Central Bank, acting through the Irish Financial Services Regulatory Authority (Financial Regulator).
The Financial Regulator, Matthew Elderfield, sought their appointment in light of the "very serious concerns" it had about the financial position the Sean Quinn-founded company, which employs more than 5,000 people and operated both in Ireland and the UK.
Today Counsel said that while that affidavit did not address the regulator's "very serious concerns" about Quinn Insurance's position the affidavit merited careful consideration and a response.
Counsel suggested to the court that the regulator would file its response to Quinn Insurance's affidavit by Wednesday of this week, and that the company could file any response to that by Friday. Counsel said that the application to confirm the appointment of the administrators could be heard next Monday.
Mr Michael Cush SC for Quinn, who consented to the adjournment, suggested that the final response could be filed by next Monday rather than Friday and that the matter could be heard later next week.
However Mr Justice Kearns, noting the importance and the urgency of the case said that the case will proceed next Monday. The judge also ordered that the provisional administrators remain in place until after the full hearing of the matter has been concluded.
The court also heard from Bernard Dunleavy, Bl for the provisional administrators, had prepared a report which was filed with the court.
Two weeks ago at the High Court, Mr Justice John Cooke said he was satisfied to appoint Mr McCann and Mr McAteer as provisional administrators. The Regulator’s application, he added, had complied with section 2 of the 1983 insurance No 2. Act.
The Regulator sought the appointment due to a number of concerns including that the company had "significantly breached" its' solvency ratios, that its subsidiaries had entered in a series of guarantee agreements that had reduced its assets by some €448m, and had failed to deliver a financial plan aimed at restoring its financial health.
The Regulator, who supervises insurance businesses within the State, said that the application was "urgent" because of concerns about the way the company was conducting its affairs and its abilities to comply with supervisory regulations.
The company, it was claimed, was unable to comply with the requirements of the supervisory regulations of the 1983 Insurance Act (No2), and because it has failed to make adequate provisions for its debts, including contingent and prospective liabilities.
It was claimed in an affidavit by Domhnall Cullinan, an officer within the Insurance Supervision Department of the Financial Regulator, that the manner in which Quinn Insurance was conducting business "was jeopardising and prejudicing the rights and interests of those who have insurance policies with the company".
If Quinn, the affidavit said, was to continue as at present there may not be sufficient funds to meet claims under those policies.
The appointment of administrators to Quinn Insurance would assist in the maintenance of public interest of the proper and orderly regulation and conduct of the business and would carry on the company's affairs as a going concern and to conduct business with a view to putting it on a sound commercial footing.
Mr Cullinan said the company's ability to comply with the solvency requirements was fundamentally called into question on March 24 last, when the Regulator was informed by Quinn Insurance's Chairman Mr Jim Quigley that certain subsidiaries of the Quinn Insurance Ltd had entered into guarantees in connection with facilities made available to the Quinn group.
It was claimed that following a meeting between the Regulator and the company it was revealed that the affect of these guarantees had reduced the insurer's assets by some €448m and thus "wiped out" the company's solvency cushion and caused that its liabilities now exceed its assets.
As a result the company, the court heard, had gone from a position of having assets over liabilities of some €200m to the current situation where there is an excess of liabilities over assets of more than €200m.
He said that information called into serious question Quinn Insurance's internal control mechanisms plus its administration and accounting procedures.
