Restructuring Act, Commutation Plan Constitutional, State Judge Rules

PROVIDENCE, R.I. - The Rhode Island Voluntary Restructuring of Solvent Insurers Act and a commutation plan proposed by a captive reinsurer in runoff do not violate the Contract Clauses of the U.S. and Rhode Island Constitutions because they do not substantially impair creditors' rights under the reinsurance treaties at issue, a state judge has ruled. In re GTE Reinsurance Company Ltd., No. PB 10-3777 (R.I. Super. Ct., Providence Cty.).

On April 25, Judge Michael A. Silverstein of the Providence County Superior Court further ruled that even if the act and the plan substantially impaired creditors' rights, such impairment "is justified …