Companies not based in Bermuda but offering insurance services on the Island will soon be entitled to restructure their debt with local creditors.

Last night the House of Assembly broadened the application of creditor schemes of arrangement to include non-resident insurance undertakings.

Companies in financial difficulties generally use a creditors' scheme.

The scheme can result in restructuring debt and can also see creditors agree to a one off payment or for payment to be deferred in order to ensure a company does not go into liquidation.

Minister Cox said: "This ultimately benefits both the company's creditors and shareholders. Schemes of arrangement can also be used in debt-equity swaps, takeover scenarios, corporate restructuring and to eliminate long-term obligations of a company.

"Currently the Companies Act which governs schemes of arrangement only applies to companies which are incorporated in Bermuda.

"It does not provide for schemes to be proposed or sanctioned for foreign companies that operate in Bermuda.

"This amendment will give specifically non-resident insurance undertakings and their creditors the ability to enter into a scheme under Bermuda law. This will ultimately provide the companies the same ability to protect and assist their creditors that Bermuda incorporated companies currently enjoy."

Both Opposition MP Bob Richards and Grant Gibbons said they believed the amendment may have been a case of "closing the barn after the horse as bolted" with regards to an insurance company they did not name in the House last night.

The Royal Gazette understands they were referring to British American Insurance Company which filed for bankruptcy in November last year.