by General Electric Co., was never authorised to leave the state, and in fact never ceased to be a Massachusetts company, Linda Ruthardt had petitioned the court to appoint her receiver of the company.

The petition also requested an injunction barring EMLICO, its agents, and employees from proceeding with the affairs of the company.

But early last week, lawyers for the Bermuda liquidators (David E.W. Lines and Peter C.B. Mitchell of Coopers & Lybrand Bermuda and their London partner Christopher Hughes) presented a motion before the court to dismiss her petition with prejudice.

Their position is that EMLICO is a Bermuda insurer involved in winding up proceedings under the Bermuda Supreme Court since October 1995.

They cited a more than 75 year old US Supreme Court ruling that held that when "a court of competent jurisdiction has, by appropriate proceedings, taken property into its possession through its officers, the property is thereby withdrawn from the jurisdiction of all other courts.'' It was also submitted that the liquidators are the real interested parties in this matter and by seeking the appointment of Ms Ruthardt as receiver, the petition "directly attacks the Bermuda liquidators statutory functions under Bermuda law.

"As officers of the Bermuda court, the Bermuda liquidators qualify as instrumentalities of a foreign state, and US courts are therefore precluded from exercising jurisdiction over this action under the Foreign Sovereign Immunities Act.'' The liquidators argued that the commissioner's petition "requests an order that effectively nullifies the Bermuda court's orders appointing and giving directions to the Bermuda liquidators' authority to take control of the company and its assets, and enjoining all others from interfering with that control or those assets.

"Under the Act of State Doctrine, US courts are precluded from entering an order that contravenes the decrees of a foreign court with respect to property within its jurisdiction.'' The liquidators stated: "Every federal court to have considered the question, has concluded that Bermuda insolvency law (which is derived from British law) provides a comprehensive and equitable procedure for the liquidation of insolvent companies that is entitled to respect and comity.

"By seeking to wrest control of the EMLICO estate from the Bermuda Court and its officers, the petition clearly violates these well-established principles of international comity.'' The liquidators said EMLICO no longer has officers or employees, or even policyholders in Massachusetts. GE, the only creditor, is domiciled outside of Massachusetts. And the commissioner revoked the insurer's licence to conduct insurance business in the state once notified in October 1995 that it was being wound up in Bermuda.

"Thus,'' they said, "there is no basis for any supposition that any Massachusetts policyholder or consumer has any stake in the disposition of the pending petition.'' The liquidators argued that although the petition lists EMLICO as defendant, it seeks relief that can only be granted against the Bermuda liquidators. Yet the First Circuit has already held that liquidators are public officials, fully entitled to the immunity of the court that appointed them.

The liquidators assert that they are "agencies or instrumentalities'' of Bermuda.

James Michael Keyes, company partner for the liquidators' Bermuda lawyers Appleby, Spurling & Kempe (AS&K), in a supporting document stated that Bermuda law prohibits the discontinuance of an insolvent company.

AS&K insolvency partner, Nigel John Howcroft, pointed out that the liquidators are required to submit certain financial information to the Registrar of Companies every six months.

Another supporting document from joint liquidator Peter Mitchell noted that EMLICO no longer has any employees or officers anywhere other than two directors in Bermuda, who also serve as its officers.

Court records show that EMLICO's Bermuda liquidators have told how they marshalled and liquidated hundreds of millions of dollars worth of assets, since taking over the company in October 1995.

This was revealed as the Massachusetts commissioner of insurance, Linda Ruthardt, stated in notes to court filings on Friday that she understood that sole policyholder General Electric Co. only submitted its environmental claim to EMLICO last June.

In papers filed before the Massachusetts US District Court, liquidators David E.W. Lines and Peter C.B. Mitchell of Coopers & Lybrand Bermuda and their London partner Christopher Hughes, said they have reviewed more than $170 million dollars in insurance claims, negotiated multi-million dollar settlements with a number of the company's reinsurers and participated in litigation and arbitration with several others.

The marshalled assets of the estate include the company's books and records and more than $370 million in cash and securities.

The liquidators have restructured the company's investments, generating tens of millions of dollars in income, and liquidated more than $300 million worth of securities with a gain of more than $94 million.

The liquidators also noted that with the assistance of a large team of experts (including actuaries, lawyers, engineers and others), they have embarked upon the complex process of reviewing and analysing more than $500 million in further environmental claims submitted by GE, EMLICO's sole policyholder, negotiated and entered into settlements with reinsurers, netting more than $100 million in additional income and are currently negotiating with others.

COURTS CTS