Bank May Not Pursue Claims Against Insolvent Reinsurer in Foreign Court, Del. State Court Rules

WILMINGTON, Del. — A Delaware court has denied a bank’s request to lift an anti-suit injunction in order to name an insolvent reinsurer as a defendant in a South Carolina action involving trust agreement proceeds, finding it would contravene the policies of the Uniform Insurers Liquidation Act.

In a July 7 opinion, the Delaware Chancery Court further held that allowing the bank to pursue its claims against Freestone Insurance Co. would force the receiver to divert a portion of the reinsurer’s limited resources to litigation defense and would prejudice the receiver and other claimants.

Freestone, a Delaware-domiciled insurer, was placed …