Whiteley Insurance Consultants - in Liquidation (unlimited liability partnership)

Nicholas Reed and Dan Schwarzmann were appointed Joint Provisional Liquidators ("JPLs") of Whiteley Insurance Consultants ("WIC") on 26 April 2005. On 15 June 2005, WIC was placed into compulsory liquidation and Nicholas Reed and Dan Schwarzmann were appointed Joint Liquidators ("JLs"). The appointment of JPLs was made following an application by the Financial Services Authority to the Court on public interest grounds because WIC had been selling insurance policies that were not underwritten by an insurance company.

• History of liquidation
• Making a claim
• Present position

As a result of the application of the Insurers (Winding Up) Rules 2001 and the recently enacted Financial Services and Markets Acts, the WIC case prompted consideration of an area of law which had not been tested previously. The JLs therefore had to approach the Courts for directions as to the treatment of certain potential classes of claim in the liquidation of WIC. The main technical issue centred on whether or not policies purchased from WIC that were not underwritten by an authorised insurer, were entitled to claim for a return of premium.

The directions hearing was held in December 2007 with the judgment being handed down by the Honourable Mr Justice David Richards on 25 July 2008.

As a result of the judgment, the JLs are directed to deal with certain classes of claims, i.e. those claims, past and present, which were not underwritten by an authorised insurer ("unauthorised policies") in accordance with the Protocol which has been approved by the Court.

It is not possible for the JLs to identify the total population of unauthorised policies but the key points under the Protocol are as follows:

• Those policyholders who purchased unauthorised policies between 1 November 2001 and 13 January 2005 are entitled to claim a refund of the premium they paid. The exception to this is where a claim has been made or is pending under the policy and therefore the policyholder is treating the policy as enforceable
• Those policyholders who purchased unauthorised policies on or after 14 January 2005 (when following a change in law WIC became authorised as an insurance intermediary) are not entitled to claim a refund of their premium.  If however, the policy had not expired on 15 June (the date of the winding-up-order) the policyholder is entitled to a proportionate return of premium in relation to the unexpired policy cover.
• Holders of an unauthorised policy which had not expired on 15 June 2005 (the date of the winding-up order) are not entitled to claim under their policy in respect of events or losses which occurred after that date, but are entitled to proportionate return of their premium.
• Policyholders may have further claims against WIC as damages for breach of contract, in particular in respect of the additional cost of replacement policies or for incidental costs incurred by the policyholder.

Copies of the judgment and Order of the Honourable Mr Justice David Richards dated 25 July 2008 (to which the Protocol is annexed) are available for download via the link below or may be obtained (at a reasonable cost to cover copying and postage charges) from the JLs at the address above.

Judgment (2.58MB PDF)

Minute of Order and Protocol (234K PDF)

Annex 1 - Schedule 2: Identification of unauthorised policies (11.9MB PDF)

Furthermore on 10 January 2008, on application by the Official Receiver, an Order was made by District Judge Smith pursuant to section 6 of the Company Disqualification Act 1986 disqualifying Mr Whiteley from, amongst other things, acting as the director of a company for a period of 12 years. The grounds for the disqualification relate to Mr Whiteley's conduct as a partner of WIC.

Information and guidance on how to make a claim are detailed in the letter to policyholders and Statement of Claim Form, which are available for download via the links below.

Annex 2 - letter to policyholders (21K PDF)

Statement of Claim Form (91K PDF)

If you have already contacted the JLs with details of your claim you do not need to do so again, unless there are additions or changes to the information previously provided. The JLs will undertake a review of all claims submitted and will contact creditors individually with an assessment of their claim in due course.

The JLs wrote to creditors of WIC in February 2010, following the JLs declaration of a first interim dividend at 17 pence in the £ which were formally agreed and distributed to unsecured creditors. The JLs are pleased to announce that the JLs have reached a settlement with Mr and Mrs Whiteley, as contributories' of WIC, under the terms of the outstanding judgments against Mr & Mrs Whiteley granted by the High Court. This has resulted in a further contribution of £2.5m and an estimated second and final dividend of 53p in the £. This represents a cumulative estimated dividend of 70p in the £.
The JLs believe that this settlement represents the best outcome for creditors and brings finality and resolution of all outstanding matters in the estate.
A notice of intention to declare a second and final dividend was issued in December 2010 but unfortunately the JLs were unable to declare and distribute the dividend within the statutory timeframe. Therefore the JLs are obliged to undertake the formalities of reissuing the notice of intention to declare a second and final dividend. This further notice  was issued in May 2011 requesting any policyholder and other creditors of WIC to provide a prove of debt by 1 July 2011 being the last date for proving a debt for inclusion within the second and final dividend. A copy of this letter can be downloaded below.

Notice of Intended Dividend letter (84K PDF)

On the assumption that no significant new claims are received, the JL’s expect to be in a position to pay the second and final dividend payment by 1 October 2011 if not sooner. If significant new claims are lodged with us before the last date of proving, the declaration and payment of the dividend could be delayed.

Those policyholders who purchased unauthorised policies on or after 14 January 2005 may be eligible to claim the shortfall between the agreed value of your unsecured claim and the amount actually received pursuant to the interim dividend and any other dividend that may be declared, from the Financial Services Compensation Scheme ("FSCS"). The FSCS will contact those policyholders by letter to explain the provisions of the scheme and how to register a claim. A copy of this letter is available for download below.

 FSCS compensation letter (134K PDF)

The JLs will continue to keep the Creditors' Committee closely appraised of all major issues.

Should you require further assistance or information please contact the WIC helpline on 020 7213 2771 or via email at whiteley.liquidation@uk.pwc.com