Ltd. into provisional liquidation in a bid to recover up to $2.2 million dividended out of Belvedere in 1996, according to an overseas newsletter.

Part of the dividend, about $663,000, was declared in June, 1996 and was considered technically illegal under Bermuda law, according to Inside Bermuda newletter. Under an amendment to The Insurance Act all dividends in excess of 15 percent of contributed surplus required the consent of the Minister of Finance.

Belvedere's management was made aware of the problem during an audit review the following year by Deloitte & Touche. Then Minister of Finance Grant Gibbons retroactively approved the dividend in September, 1997 after discussions between Government and management, according to the newsletter.

Liquidator Malcolm Butterfield and Anthony McMahon are seeking to have the approval declared illegal and the money returned. Colin O'Connor and Thomas Hamill are the principals of Caliban Holdings.

The liquidators are apparently going to argue that the dividend and the rest of the money should not have been declared as the company was in financial difficulties, according to the newsletter.