Modifications of/additions to the Scheme of Arrangement

The modifications and additions are highlighted as track changes below:

Clause 3.2 of the Scheme of Arrangement in respect of stay of proceedings:

‘3.2.5          For the avoidance of doubt, any contractual Liability of the Company under or arising out of an Insurance Contract or Non-Insurance Contract, from time to time to, without limitation, increase supplement or augment collateral is not a Scheme Claim and cannot become an Established Scheme Liability.  Furthermore, no Scheme Creditor shall be entitled to take any proceeding or step (whether by way of demand, legal proceedings, execution of judgment, arbitration proceedings or otherwise howsoever) against the Company or its property in any jurisdiction whatsoever for the purpose of, without limitation, increasing, supplementing or augmenting collateral. For the avoidance of doubt, this clause shall not apply to any claim or right preserved by clauses 3.4 or 3.5.’

Clause 3.4 of the Scheme of Arrangement in respect of security, letters of credit and trusts:

‘3.4.1 (b)    Any letter of credit issued or trust created (expressly, by implication or by operation of law or equitable principles) in respect of the Company and of which it is a beneficiary, or any right of set-off or analogous right arising under any Insurance Contract, Non-Insurance Contract, applicable law or equitable principles, if such letter of credit or trust or right arose, was issued or created before the Commencement Date, or which has been created after the Commencement Date with the agreement of the JPLs or  which has been created after the Effective Date in accordance with the Scheme of Arrangement.’

‘3.4.2          Nothing in the Scheme of Arrangement shall affect the right of the Company against any person, or the right of any person against the Company, in respect of any wrongful drawdown or enforcement of any security, letter of credit issued or trust created in respect of the Company or in respect of any Scheme Claim, including any claim arising out of the alleged withdrawal, transfer, misapplication or dissipation of assets subject to, attributable to, or allocable to such trust.’

Clause 3.5 of the Scheme of Arrangement in respect of set-off:

‘3.5.2 (c) Nothing in the Scheme of Arrangement shall affect any right of set-off or analogous right which a Scheme Creditor may have against the Company, whether arising by contract, applicable law or equitable principles or upon which a Scheme Creditor could have relied if the Company were being wound up pursuant to a winding-up order made on the Commencement Date.’

Clause 7.3 of the Scheme of Arrangement in respect of Creditors’ Committee meetings:

‘7.3.1           Each member of the Creditors’ Committee and, the Company, and the Scheme Supervisors shall be entitled to receive notice of all meetings of the Creditors’ Committee, which shall. Meetings of the Creditors’ Committee maybe instigated by the Company with an agenda to be set by the Company., any member of the Creditors’ Committee, or the Scheme Supervisors, provided that all such meetings shall be reasonably requested. The requesting party shall provide an agenda for any such meeting, but any other party entitled to notice of the meeting may propose reasonable additions or amendments to the agenda.’

The Company has included the following addition to the definition of Insurance Creditor to clarify there can be no question that the statutory waterfall of priorities in an insolvency under Bermuda law is maintained for the purposes of the Scheme of Arrangement:

"Insurance Creditor" means a creditor of the Company in respect of a Net Scheme Claim arising from an Insurance Contract, where such Net Scheme Claim constitutes an insurance debt within the meaning of Part VII of the Insurance Act 1978;

Furthermore, the definition of Insurance Creditor has been updated in Part 1: Explanatory Statement, Section A: Key Definitions, to reflect the same change. In addition, the following language has also been added to Part 1: Explanatory Statement, Section D: Main Factors to Consider when Voting on the Scheme of Arrangement, paragraph 1:

A Scheme Creditor is an Insurance Creditor who has, or may in the future have, a claim against the Company under an Insurance Contract, where such claim constitutes an insurance debt within the meaning of Part VII of the Insurance Act 1978.

A new paragraph has been added at the end of Part 1: Explanatory Statement, Section G: Corporate Governance, paragraph 3 ‘Responsibility and indemnity of the Board and the Scheme Supervisors’, as follows:

‘The Scheme of Arrangement is not intended to vary the protections afforded to any of the Company’s former directors or officers under Bermuda law, including the Company’s bye-laws and the Companies Act 1981, or to waive, release or otherwise compromise any pre-existing claims against the former directors or officers.’