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Affirmative Insurance priority entitlement claims dismissal denied
By Caroline Salls
Pittsburgh, March 30 – Claims pending in Affirmative Insurance Holdings, Inc.’s bankruptcy case in connection with a dispute over priority entitlement to $8.57 million held in a bank account will not be dismissed, according to an opinion filed Wednesday with the U.S. Bankruptcy Court for the District of Delaware.
Those funds in question are a portion of the proceeds from the sale of the Affirmative debtors’ managing general agencies.
According to the opinion, Affirmative Insurance Co. court-appointed liquidator Anna Melissa Dowling asked the court to impose a constructive trust or resulting trust over all funds held in the bank account.
Since she claims the outcome of this dispute will have no effect on the administration of Affirmative Insurance Holdings estates, Dowling said the dispute should instead be heard by an Illinois state court as part of Affirmative Insurance Co.’s ongoing rehabilitation proceeding.
On the other hand, the court said holding company lender JCF AFFM Debt Holdings, LP asked the court to rule that it has a validly perfected security interest in and a lien on the deposit account.
The court said in Wednesday’s opinion that ownership of the funds in question is key to the priority determination.
“Since the court finds that the counterclaims contain specific factual allegations, taken they are true, to suggest that the AIC liquidator is entitled to the funds, the court holds that dismissal is not appropriate at this time,” the opinion said.
Affirmative Insurance is a Burr Ridge, Ill.-based producer and provider of personal non-standard automobile insurance policies to individual consumers. The company filed bankruptcy on Oct. 15, 2015 under Chapter 11 case number 15-12136.
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