As the meeting wore on, the solicitors described the investigations conducted in each of the claims, how far the court cases in London and New York had progressed, how they were expected to go and according to the evidence thus far, what Plantation’s prospects of survival were. In a word, it looked bleak. Plantation was in a crisis but the situation was not yet desperate.
Rob Ashby could see how the stress of it all must finally have been too much for his father.
A conference was arranged for him to attend the following morning in the Captain Stratos case. Roger Grenville then introduced the last speaker, a tall, thin man with a perpetual frown and wearing a dark grey suit.
“Many of you already know George Waring of Westbridge Actuaries. He’s been looking over our accounts and advising us on the company’s solvency position.”
Waring lost no time explaining the predicament facing the company.
“I’ve spoken several times with the company’s accountants and there is no doubt whatsoever that if just one of these claims succeeds – just one of them – the company will immediately be insolvent and will be forced into liquidation. Some of the claimants already know this and have no desire to throw good money after bad. One or two are ready to negotiate settlements. Even if that happened, there would still be a deficiency in the company’s coffers to pay as little as twenty five per cent of what is claimed. This also happens to be well known in the market – brokers are extremely good at spreading gossip – and we’ve received a number of approaches to buy the company outright. Essentially, the offers we’ve received amount to taking over the business as a going concern, resolving the claims position and giving the directors and shareholders indemnities against future claims.”
“In other words,” said Ashby, “the shareholders wouldn’t get a brass farthing, the buyers would take over the company lock, stock and barrel and there would be empty promises of no come-back against us personally in the future.”
“In a manner of speaking, Mr Ashby. We haven’t yet been introduced but may I have a word with you in private after the meeting ends ?”
“What offers ? Who are these carpetbaggers ?” asked Ray Wilkes, one of the directors.
“They include Vesuvio Specifica Assicurazioni – Specifica. They are a fairly well-known Italian reinsurer in the London market. Then, there’s Alt Deutsche Versicherungs Aktiengesellschaft – ADV….another reputable German company – I’m sure you’ve heard of them….”
“Thank heavens we all use acronyms, eh ?” said Thomas. “We’d never get through the day if we had to pronounce all of that lot…”
“There are others,” continued Waring. “I should also mention that we’ve come across a rather large tax bill from the Inland Revenue which your accountants had put off over the years but which has now fallen due for payment – and the Revenue is no longer willing to be patient.”
“How long have they given ?” asked Thomas.
“One month and no more.”
“Have terms been offered ? What about instalment payments ?”
“Terms were offered – and refused. It seems they have been waiting so long for the bill to be paid that they can wait no longer – and possibly because they’ve heard of Plantation’s solvency position.”
“And so, what do you think we should we do ?” asked Ashby.
“You are now the largest shareholder, Mr Ashby – it is for you to decide one way or the other. And that is what we need to discuss between us. However, I would also mention to everyone within these four walls that….quite remarkably, none of the six claims has been given any reserve. Usually when a claim is notified to an insurer, money is put aside to pay for it. Now….this has not occurred here and there are zero reserves to pay any or all of the six if they are proved to be valid. Strictly speaking, this would be a breach of the insurance rules operated by the market and which the government will expand on, in the next year. It is something which you, as a board, should be aware of and consider appropriate action.”
“Why on earth should we put money aside for something which may well turn out to be bogus ?” said Wilkes. “What you’re suggesting is absurd. Jim Ashby must have had his reasons for not reserving for these six claims and I respect his judgement.”
“Even so,” replied Waring, “the rules are being tightened up and you must be ready for that. If the rules were strictly enforced, Plantation would at this moment be insolvent and on the way to being wound up.”