The suit by Bermuda Fire & Marine Insurance Co. Ltd. liquidators against the company's former directors and about 1,000 shareholders of BF&M Ltd. will be heard by Supreme Court in May next year.

The case is set to become one of the fiercely fought court battles, pitting liquidators of one of the most controversial bankruptcies in Bermuda's history against some of the Island's top lawyers, law firms and businessmen as defendants.

Ordinary shareholders in publicly traded BF&M are also caught up in the case as liquidators want to seize their stock as assets of Bermuda Fire. The liquidators have estimated Bermuda Fire to be insolvent by about $1.4 billion.

On Monday and Tuesday this week lawyers for the liquidators and five groups of defendants piled into Supreme Court Number One before Puisne Judge Richard Ground for a second pre-trial hearing, held in Chambers.

One of the issues was the setting of a date and a venue. The trial is estimated to last four months and will involve about 30 lawyers. Since there are so many lawyers one of the suggestions being considered is to remodel Court Number One to fit everyone involved.

Space has also been booked at The Bermuda College International Commercial Arbitration Centre in case the court is not ready in time for the civil trial over whether a fraud was committed in breaking Bermuda Fire & Marine into two companies.

Since Justice Ground is scheduled to leave the Island, reportedly to become chief justice in Turks and Caicos, a judge has not been chosen yet to oversee the proceedings.

Liquidators Ernst & Young are suing for recovery of assets they allege were stripped from the company and given as common stock to about 1,000 Bermuda Fire shareholders. BF&M was set up under a plan made by company directors in 1991 to buy Bermuda Fire's profitable domestic assets. Two years later Bermuda Fire went into liquidation with debts owed mainly to US insurance companies.

The liquidators allege the sale was an attempt to avoid paying claims. Bermuda Fire's 1991 directors have said they acted in the best interests of the shareholders and policyholders, who include creditors.

Other defendants are law firm Conyers Dill & Pearman, accounting firm Cooper & Lines, and 1991 Bermuda Fire directors Charles Collis (now deceased), William Cox, Donald Lines, Greg Haycock and Michael Collier.

Marshall & Co. are acting for a shareholders group made up of 830 members. The firm is also acting for BF&M. Appleby Spurling & Kempe are representing the former Bermuda Fire directors. Cox, Hallett & Wilkinson represent Conyers Dill & Pearman. Hector, Dwyer & Associates represent Coopers & Lines.

Writ documents filed by Milligan-Whyte & Smith, lawyers for the liquidators, name a wide variety of individual and institutional shareholders.

They include Bermuda Press Holdings pension funds, the Bermuda Church Society, business man and former Hamilton mayor William Boyle, businessman Warren Brown, Bank of N.T. Butterfield and Son Ltd. chairman James King, Bermuda Broadcasting chairman Fernance Perry, Saltus Grammar School Trustees, the Rector and Church Wardens of St. Mary's Church, the Vestry of the Cathedral of the Holy Trinity, former premier Sir John Sharpe, Royal Gazette editor David L. White, and Colin Reed Young.

The trust companies of the Bank of Butterfield and the Bank of Bermuda, Sir John, Michael Darling, Charles Mann and Francis Patterson helped form The BF&M Limited Shareholders' Association. Trading in BF&M common shares were suspended on October 25, 1995.

Bermuda Fire got into financial trouble by providing reinsurance through London-based H.S. Weavers (Underwriting) Agencies Ltd. for risks such as asbestos and pollution. H.S. Weavers is also in liquidation.