companies, a long standing insolvency practitioner has said.

Charles Kempe said current procedural requirements are outdated, and some could be done more expeditiously.

The chartered accountant is retiring from the Ernst & Young's Bermuda office, Kempe & Whittle. A fresh approach is needed, he said, but legislative change takes so long, improvements won't become law until the new millennium.

"I'm not saying that the laws are inequitable or unjust,'' he clarified, "I'm just saying that we're not working with the latest tools. We are trying to resolve today's problems with yesterday's solutions.'' The statute governing insolvent companies is part of the Companies Act, an outgrowth of legislation that existed in the early part of this century with roots in laws first enacted in the late 1800s.

"A new act altogether is needed,'' Mr. Kempe insisted. "For purposes of statutory precedence and usefulness to our system of jurisprudence, the best thing to do is to follow the existing UK model, which is founded in the UK Insolvency Act 1986.

"There, statutes dealing with corporate insolvency were taken right out of the Companies Act and put in an insolvency act.'' Current insolvency laws in Bermuda contemplate no other course for a company apart from liquidation. Mr. Kempe said that there needs to be an opportunity for rehabilitation, reorganisation and reconstruction. "The idea of Chapter Eleven, as in the US, gives me the shivers,'' he conceded. "The concept is not bad, but the way they do it is badly flawed in the US. Sometimes it seems like it is nothing more than a circus in a court, where everyone gets a lawyer and it becomes nothing more than a free-for-all for lawyers. And those who need recoveries out of the liquidation are left standing outside the court with virtually nothing at the end of the day.'' Mr. Kempe finds a more constructive alternative in the UK, where an administrator is appointed instead of a liquidator, with broader powers. An administrator is able to take steps that would result in reconstruction or reorganisation, and a maximisation of the value of assets of the company.

He said, "If there is anything that can be saved out of it, whether it's jobs, a business, or a capital asset to the company or jurisdiction, the administrator has a much freer hand to make arrangements which will accomplish that.

"The law presently in Bermuda contemplates virtually that a liquidator is going to liquidate. The emphasis of an administrator would be much more constructive.

"The added advantage is that the court's role becomes easier, because there would also be UK precedents to follow.'' The local chartered accountant said that Bermuda statutes currently make no differentiation among insolvencies of a bank, an insurer or the local drug store, even though there are vast differences in the treatment that should be accorded to these different entities.

"You may have been able 50 years ago to construct one box in which all of these will fit. Life is too complicated today to do that.

"Reinsurance creditors and companies have totally different problems from a corner drugs store, as do other financial institutions, brokers and people like that who hold other people's money. Trust companies have fiduciary roles.

"All of these have unique problems which are difficult to deal with in the omnibus type of legislation that we are living with now. New legislation should show regard to those differences.'' One example he pointed to was the fact that liquidation did not come quickly for Bermuda Fire & Marine Insurance Company which remained in provisional liquidation for some time. Mr. Kempe remarked that as unsatisfactory as the delays were, it was perhaps tactically the best state of limbo for the company to preserve assets, while the scheme of arrangement was being devised.

He added, "But if you were to put it into administration, like in the UK, an administrator could get started from day one, with the powers to go out and start putting the thing back together, if that was what he was going to do.''