Scottish Holdings’ Chapter 11 bankruptcy case converted to Chapter 7

By Caroline Salls

Pittsburgh, April 17 – Scottish Holdings, Inc.’s Chapter 11 bankruptcy case was converted to Chapter 7 Tuesday by the U.S. Bankruptcy Court for the District of Delaware.

Last month, the official committee of unsecured creditors appointed for the Scottish Holdings case asked the court to convert the case.

The committee said in its motion that the Scottish Holdings cases have been pending for more than a year.

As previously reported, the company secured confirmation of a plan of reorganization in August 2018 that was based on a sale of Scottish Annuity & Life Insurance Co. (Cayman) Ltd. (Salic) to Hildene Re Holdings, LLC.

The committee said it supported confirmation of that plan, which would have provided a projected recovery to general unsecured creditors of 6% to 8%, but the sale could not be completed and Scottish Holdings notified Hildene in February that it was terminating the transaction.

Almost immediately after that, the committee said the company entered into a letter agreement with Hudson Structured Capital Management Ltd., which had the consent of original stalking horse bidder HSCM Bermuda Fund Ltd., in an effort to determine whether a viable alternate transaction could be negotiated on the timeframe required by the “precarious liquidity situation faced by the debtors.”

According to the motion, the letter agreement terminated on March 13 without an acceptable offer having been negotiated.

“The debtors’ estates are suffering continuing losses and diminution of the value of their estates. Salic’s cash and cash equivalents continues to dwindle, falling from approximately $17.9 million on the petition date to less than $3.1 now, and other liabilities continue to accrue, including potential inter-company liabilities,” the committee said in its motion.

“Under these circumstances, with no viable alternative to the lapsed plan in prospect, there is cause for conversion and conversion is in the best interests of creditors of these estates.”

Scottish Re Group Ltd. is a Hamilton, Bermuda-based life reinsurance company. Its Cayman Islands and U.S. subsidiaries filed bankruptcy on Jan. 28, 2018 under Chapter 11 case number 18-10160.

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