FREQUENTLY ASKED QUESTIONS

Q1. What is “liquidation”?
“Liquidation” is the process whereby the Commissioner of the Vermont Department of Financial Regulation (formerly Department of Banking, Insurance, Securities and Health Care Administration), upon an order from the Vermont Superior Court, takes possession of the assets of an insolvent insurer and administers them under the general supervision of the Court. The Commissioner is appointed the “Liquidator” of the insolvent company. The Liquidator collects any money owed to the insolvent company in order to generate cash to pay policyholders’s claims and other creditors. Liquidation usually occurs after the Commissioner has determined that the insurance company cannot be rehabilitated. A company that is in liquidation is sometimes called an “estate”. Back to top
Q2. What is a Policyholder Protection Claim?
Under the terms of Ambassador’s Liquidation Order, policyholders of Ambassador who did not know whether or not a claim would be asserted against them or the extent or nature of a known claim that would be covered by an Ambassador policy, were permitted to file a Proof of Claim by March 1, 1988, preserving their ability to request policy coverage in the future. Such claims are called Policyholder Protection Claims. Any policyholder that did not file a Proof of Claim asserting a Policyholder Protection Claim by March I, 1988, forfeited any right to seek policy coverage for claims asserted in the future. Back to top
Q3. Does the January 23, 2015 Vermont Supreme Court decision have an impact on claims against Ambassador?
The Vermont Supreme Court issued a decision on January 23, 2015, reversing a lower court decision establishing a final date for perfecting claims against Ambassador. The Decision did not re-open claims previously paid or adjudicated, create new rights or resurrect any extinguished rights. The Liquidator has already made distributions of principal and interest to all Fourth Priority claimants whose claims were approved by the Superior Court. If you had a Fourth Priority claim against Ambassador that has been paid, you are not affected by the Vermont Supreme Court’s decision.Claims subject to a final denial on the merits or denied due to an untimely proof of claim are also not affected by the Decision. If your claim against Ambassador was subject to a final disapproval by the Liquidator, then you are not permitted to re-file or to amend your claim. Claim amendments that were filed by claimants with timely filed proofs of claim that were turned down because the claim amendment was filed with the Liquidator after December 31, 2013, will be reopened and reviewed by the Liquidator. Moreover, the Liquidator will continue to accept claim amendments of timely-filed policyholder protection claims that have not already been finally denied or adjudicated. Back to top
Q4. What are the payment priorities, and why are they important?
There are two classes of claimants that may be affected by the Court’s Decision: “Fourth Priority” claimants with claims that have not previously been adjudicated and “Fifth Priority” claimants holding approved claims.

  • Fourth Priority claimants are Ambassador policy holders, persons with claims against Ambassador policyholders and state guaranty funds that made claim payments on behalf of Ambassador policyholders.
  • Fifth Priority claimants are general creditors, persons who provided goods and services to Ambassador before it went into Liquidation and an insurance company whose risks were reinsured by Ambassador.

All Fourth Priority and Fifth Priority claimants had to have filed their Proofs of Claim on or before March 1, 1988. In addition, like Fourth Priority Claimants, Fifth Priority claimants have to have their claims approved by the Liquidator and then the Court. Under the Liquidation Order, however, Fifth Priority claimants cannot receive a distribution from the Ambassador estate until all Fourth Priority claimants with approved claims have been paid in full, unless a final claim date is established in the future allowing unperfected Fourth Priority claims to be cut-off. Back to top

Q5. Why are the liquidation proceedings in Vermont courts?
Ambassador was a Vermont corporation and was domiciled in Vermont. Based on the fact that its domicile was in Vermont, the Vermont Superior Court has exclusive jurisdiction over Ambassador and all court proceedings relating to claims against the company and its assets. The Commissioner of the Vermont Department of Financial Regulation is by law the “Liquidator of Ambassador” by virtue of her office. .Back to top
Q6. How can I obtain more information?
The most recent documents from Ambassador’s liquidation proceeding can be downloaded from this website in .pdf format.These documents provide greater detail for both the legal issues and the history of Ambassador’s liquidation.You may wish to seek legal advice from an attorney to better understand your rights or to assist you in filing additional proof in support of a timely proof of claim that has not previously been adjudicated. Back to top