- 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’ 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. Why did the Court order a Final Claim Date?
- In order to begin the wind up of the estate of Ambassador, the Liquidator filed a Motion requesting that the Court enter an order that cuts off any further claim development against Ambassador so that all outstanding claims can be finalized. On November 28, 2012, the Court granted Ambassador’s request and entered an Order that sets December 31, 2013 as the Final Claim Date after which claimants against Ambassador will no longer be able to submit evidence in support of their claims. The purpose of the Order is to enable Ambassador to take the first step in the process of winding up the liquidation. Back to top
- Q3. What is the effect of the Final Claim Date?
- December 31, 2013 is the last date that proofs of claims against Ambassador can be amended and additional evidence may be submitted to or considered by the Liquidator in determining policyholder protection or other pending claims. All persons with any claims against Ambassador, including persons who hold timely-filed policyholder protection claims, must submit a final proof of claim with all available evidence in support of their claims by December 31, 2013 or their claims will be permanently barred. Back to top
- Q4. 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 futureBack to top
- Q5. What if my claim(s) against Ambassador has already been paid?
- The Liquidator has already made distributions of principal and interest to all Fourth Priority claimants whose claims were approved by the Court. If you had a Fourth Priority claim against Ambassador that has been paid, that claim will not be affected by the Court’s order establishing a Final Claim Date.Back to top
- Q6. If I previously filed a claim against Ambassador and it was rejected, can I re-file or amend that claim now?
- No. The Order does not create new rights or resurrect any extinguished rights. If you filed a claim against Ambassador that was previously disapproved by the Liquidator, then you are not permitted to re-file or to amend that claim. Back to top
- Q7. What are the payment priorities, and why are they important?
There are two classes of claimants that are directly affected by the Liquidator’s motion: “Fourth Priority” and “Fifth Priority” claimants.
• Fourth Priority claimants are Ambassador policyholders, 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.
Both 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, Fifth Priority claimants cannot, however, receive a distribution from the Ambassador estate until all Fourth Priority claimants with approved claims have been paid in full. The Liquidator filed the Motion for a Final Claim Date in part to allow the Liquidator to request approval of a distribution to Fifth Priority claimants. This request can only be filed once the Liquidator can determine the Fourth Priority liabilities and pay such claims as they are approved by the Court. Back to top
- Q8. 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
- Q9. 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. If you think that that you might be affected by the Court’s Order, it is highly recommended that you read these documents. Additionally, you may wish to seek legal advice from an attorney to better understand your rights or to assist you in filing a final proof of claim with Ambassador before the December 31, 2013 Final Claim Date. Back to top