In The Matter of The Liquidation of Freestone Insurance Company

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

IN THE MATTER OF THE LIQUIDATION ) C.A. No. 9574-VCL
OF FREESTONE INSURANCE COMPANY )

OPINION

Date Submitted: April 18, 2016
Date Decided: July 7, 2016

Diane J. Bartels, DIANE J. BARTELS LAW OFFICE, Wilmington, Delaware; James J.
Black, Jeffrey B. Miceli, Mark W. Drasnin, BLACK & GERNGROSS, PC, Philadelphia,
Pennsylvania; Counsel for the Honorable Karen Weldin Stewart, CIR-ML, Insurance
Commissioner of the State of Delaware, in her capacity as Receiver of Freestone
Insurance Company in Liquidation.

Eric Lopez Schnabel, Robert W. Mallard, Alessandra Glorioso, DORSEY & WHITNEY
LLP, Wilmington, Delaware; Michael B. Fisco, Michael M. Krauss, FAEGRE BAKER
DANIELS LLP, Minneapolis, Minnesota; Counsel for U.S. Bank National Association.

LASTER, Vice Chancellor.
 Freestone Insurance Company (“Freestone”) is a Delaware-domiciled insurer that

has been placed in liquidation. The liquidation proceeding is governed by the Uniform

Insurers Liquidation Act (the “Uniform Act”), which Delaware adopted in 1953.

Under the Uniform Act, the chief insurance regulator in the domiciliary state

oversees the liquidation process. Only the regulator can initiate liquidation proceedings in

the domiciliary state. Once a court has placed the insurer in liquidation, the regulator

takes charge of the insurer‟s operations and marshals its assets. The regulator also

manages a statutory process for receiving, evaluating, and paying claims (the “Claims

Process”).

To facilitate the fair and equitable resolution of claims, the Uniform Act

establishes a priority scheme with nine classes. Payments are made in order of priority by

class and ratably among claimants within the same class. Claims covered by policies

issued by the insurer fall under Class III. Claims of general creditors fall under Class VI.

General creditors whose claims remained contingent as of the deadline for filing claims

cannot recover anything unless it turns out that the insurer actually had a surplus.

As contemplated by the Uniform Act, the Insurance Commissioner of the State of

Delaware (the “Commissioner”) is serving as the receiver for Freestone. The

Commissioner has taken over Freestone‟s operations and has been marshaling its assets.

The Commissioner established a bar date for receiving claims and has been evaluating

the claims received. As authorized by the Uniform Act, and as is customary in insurance

liquidation proceedings, the order that placed Freestone into liquidation contained an

1
injunction barring third parties from pursuing any claims against Freestone other than

through the Claims Process (the “Anti-Suit Injunction”).

U.S. Bank National Association (the “Bank”) has moved to lift the Anti-Suit

Injunction. The Bank wishes to litigate against Freestone outside of the Claims Process,

reduce its currently contingent claims to judgment, and thereby establish the amount of

its claims and its status as a general creditor of Freestone.

The Bank served as the trustee under a reinsurance trust agreement (the “Trust

Agreement”) between Freestone and Companion Property and Casualty Company

(“Companion”). The Trust Agreement secured a reinsurance arrangement that allowed

Freestone to do business through Companion in jurisdictions where Freestone was not

qualified to sell insurance. Under that arrangement, Companion wrote policies on

Freestone‟s behalf, and Freestone reinsured the risk on the policies Companion wrote.

To secure its payment obligations, Freestone agreed under the Trust Agreement to

place collateral in a trust account for Companion‟s benefit. In its capacity as trustee, the

Bank had various obligations regarding the collateral. According to Companion, the Bank

breached its obligations by permitting Freestone to place poor quality collateral in the

trust account. When Freestone failed to make its reinsurance payments, Companion

sought to access the collateral. The value of the collateral was insufficient to cover the

claims being made on the underlying policies, and Companion has sued the Bank in

federal court in South Carolina to recover damages (the “South Carolina Action”).

As part of the Claims Process, the Bank has filed two claims notices against

Freestone that relate to the South Carolina Action. But in addition to pursuing its claims

2
through the Claims Process, the Bank wishes to name Freestone as a third-party

defendant in the South Carolina Action itself. The Bank wants to sue Freestone in that

proceeding for contribution and indemnification, and it hopes to obtain a judgment. The

Bank represents that it would not seek to execute on the judgment outside of the

liquidation proceeding.

The Bank has asked this court to lift the Anti-Suit Injunction so that the Bank can

assert and pursue its third-party claims against Freestone. Granting that relief on the facts

presented would contravene the policies of the Uniform Act, interfere with the Claims

Process, and impose unnecessary and unwarranted costs on Freestone and the

Commissioner. The Bank‟s motion to lift the Anti-Suit Injunction is denied.

I. FACTUAL BACKGROUND

The factual background is drawn from the submissions made by the parties in

connection with the Bank‟s motion. The material facts are undisputed.

A. Freestone And Companion Enter Into Reinsurance Agreements.

Beginning in 2005, Freestone and Companion entered into a series of reinsurance

agreements pursuant to which Companion acted as a fronting insurer for Freestone.1 The

arrangement enabled Freestone to sell insurance in jurisdictions where Freestone was not

qualified to do business by allowing Freestone to sell policies issued by Companion,

1
At the time, Freestone was a Texas-domiciled insurer known as Dallas National
Insurance Company. In 2013, Dallas National re-domiciled in Delaware and changed its
name to Freestone. The parties use its current name, so this decision does too. The parties
took the opposite approach with Companion, which is now known as Sussex Insurance
Company. The parties call it Companion, and this decision follows their lead.

3
which had the necessary qualifications. Under the terms of the reinsurance agreements,

Companion retained a portion of the premium charged for the policies and ceded the rest

of the premium to Freestone. In return, Freestone agreed to reinsure Companion for

100% of the risk of loss on the policies. Companion effectively received a fee for letting

Freestone use its name, with the expectation that Freestone would pay any claims under

the policies.

Companion understandably wanted security for Freestone‟s promise to pay. To

provide that security, Freestone, Companion, and the Bank entered into the Trust

Agreement.2 Under its terms, Freestone agreed to deposit collateral sufficient to cover its

obligations to Companion with the Bank, which agreed to hold the collateral as trustee

for the benefit of Companion.

Under the terms of the Trust Agreement, the Bank had to comply with Freestone‟s

instructions regarding the collateral. For example, Section 4(c) of the Trust Agreement

stated: “[Freestone] may direct [the Bank] to substitute Assets of comparable value for

other Assets presently held in the Trust Account with written notification to

[Companion].” It also specified that “[the Bank] shall comply with any such direction.”

At the same time, Section 7(b) of the Trust Agreement provided that

2
Technically, the Bank agreed to become the successor trustee under a pre-
existing trust agreement. That distinction is not important for the current motion, so this
decision passes over it. The trust arrangement that Freestone, Companion, and the Bank
created is not uncommon. See Nat‟l Ass‟n of Ins. Comm‟rs, Receiver’s Handbook for
Insurance Company Insolvencies 410-11 (2016) [hereinafter Receiver’s Handbook]
(providing generic description of arrangement in which trust fund is used to secure
payment obligations and identifying related issues for delinquency proceedings).

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 [b]efore accepting any Asset submitted for deposit to the Trust Account,
[the Bank] shall determine that such Asset is in such form that
[Companion] whenever necessary may . . . negotiate such Asset without
consent or signature from [Freestone] or any person or entity other than [the
Bank] in accordance with the terms of this Agreement.

Under Section 7(f) of the Trust Agreement, the Bank also was responsible for providing

Companion with a monthly account statement identifying the assets in the Trust Account,

and the account statement was deemed “a certification of [the Bank] that the fair market

value of the Assets in the Trust Account is true and correct according to the best

information and belief of [the Bank].”

Section 4(c) further stated that in connection with any substitution of assets,

Companion was entitled to rely on the following representation and warranty from

Freestone:

Each time that [Freestone] provides [the Bank] with [a] substitution
direction it shall be considered a representation and warranty of [Freestone]
that (i) the substitute Assets are Eligible Securities or cash, and (ii) [the
Bank] has determined that the fair market value of the substituted Assets is
not less than the fair market value of the Assets being replaced thereby.

Section 11 of the Trust Agreement defined “Eligible Securities” as cash, certificates of

deposit, or other investments that insurance companies were permitted to hold under

South Carolina insurance law. Under Section 7(c) of the Trust Agreement, the Bank had

no “responsibility whatsoever to determine that any Assets in the Trust Account are or

continue to be Eligible Securities.”

As these excerpts from the Trust Agreement show, the document reflects a

negotiating dynamic in which the Bank sought to limit its exposure by having as few

contractual obligations as possible, while Companion sought to protect itself by imposing

5
obligations on both the Bank and Freestone. This decision need not and does not express

any view on the meaning of or interrelationships among the competing contractual

obligations, nor their interactions with common law principles or equitable doctrines.

Section 12 of the Trust Agreement stated that “any action or proceeding brought

by [Freestone] arising out of or relating to this Agreement must be, and any action or

proceeding brought by [the Bank] or [Companion] may be, brought in the Federal Court

of South Carolina.” For Freestone, the choice of forum clause was mandatory. For the

Bank and Companion, it was permissive.

B. The Southport Entities Acquire Freestone.

In 2013, entities affiliated with Southport Lane Advisors acquired Freestone. At

the time, Southport and its affiliates were controlled by Southport‟s co-founder, then-

majority owner, and then-chief strategist, Alexander Chatfield Burns. Under Burns‟

leadership, Southport pursued aggressive strategies.

On April 24, 2014, the Commissioner petitioned to place Freestone into

rehabilitation, averring that Freestone was “impaired, in unsound condition, and in such

condition as to render its further transaction of insurance presently or prospectively

hazardous to its policyholders.” Dkt. 1 ¶ 14. Freestone did not oppose the petition and

consented to entry of a rehabilitation order.

The Commissioner subsequently petitioned to place Freestone into liquidation. By

order dated July 22, 2014, this court granted that relief. Dkt. 68 (the “Liquidation

Order”). As contemplated by the Uniform Act, the Liquidation Order appointed the

6
Commissioner as receiver. The Liquidation Order included the Anti-Suit Injunction,

which provided as follows:

All persons and entities that have notice of these proceedings or of this
Order are hereby prohibited from instituting or further prosecuting any
action at law or in equity, including but not limited to any arbitration or
mediation, or other proceedings against FREESTONE [or the]
Commissioner as Receiver . . . or from obtaining preferences judgments,
attachments, or other like liens or encumbrances, or foreclosing upon or
making any levy against FREESTONE or the Assets, or exercising any
right adverse to the right of FREESTONE to or in the Assets, or in any way
interfering with the Receiver . . . either in [her] possession and control of
the Assets or in the discharge of [her] duties hereunder.

Id. ¶ 11.

In accordance with the Uniform Act, the Liquidation Order instructed the

Commissioner to marshal Freestone‟s assets and conduct the Claims Process. The

Liquidation Order set a bar date of December 31, 2015, for parties to file notices of

claims against Freestone.

C. Companion Sues The Bank.

On March 20, 2015, Companion sued the Bank in the South Carolina Action.

Companion‟s complaint alleged that “the Bank allowed the Trust Account[] to be

depleted of Eligible Securities, including investments in reputable bonds and stocks, and

instead the Trust Account[] now hold[s] securities that are illiquid and appear to have

little to no value.” Dkt. 251, Ex. 2 ¶ 36. Companion alleged that between May 2013 and

January 2014, Freestone instructed the Bank to replace relatively liquid and secure assets

in the Trust Account with less liquid and less secure interests in non-public entities,

resulting in the value of the collateral in the Trust Account declining from approximately

7
$73 million in January 2013 to approximately $55 million in March 2014. Companion

contended that the $55 million figure was itself inflated and that that the actual value of

the collateral was much lower. Companion alleged that the Bank

negligently, grossly negligently, recklessly, willfully, and/or wantonly
allowed . . . Freestone to substitute into the Trust Account collateral Assets
that were not of comparable value and without any independent
determination that the fair market value of the substituted Assets [wa]s not
less than the fair market value of the Assets being replaced.

Dkt. 251, Ex. 2 ¶ 25 (quotation marks omitted). Companion contended that by doing so,

the Bank breached Sections 4(c) and 7(b) of the Trust Agreement.

On May 18, 2015, the Bank moved to dismiss the complaint, arguing that it

merely followed Freestone‟s instructions and could not be held liable under the terms of

the Trust Agreement. On November 24, 2015, the United States District Court for the

District of South Carolina (the “South Carolina Court”) largely denied the motion. See

Companion Prop. v. U.S. Bank Nat’l Ass’n, 2015 WL 7568613 (D.S.C. Nov. 24, 2015).

D. The Bank Files Claims Notices, Then Seeks Leave To Sue Freestone In The
South Carolina Action.

On December 31, 2015, the Bank filed two claims notices as part of the Claims

Process. Both related to the South Carolina Action.

The Bank filed the first claims notice in its capacity as trustee under the Trust

Agreement. That notice asserted claims on behalf of Companion, the Bank‟s beneficiary,

to the extent that Companion “suffered damages as a result of actions or inactions of

Freestone, including, but not limited to, the direction of Freestone or its agent to purchase

assets placed in the Companion Reinsurance Trust.” Dkt. 256, Ex. C at A-2.

8
 The Bank filed the second claims notice on its own behalf. That notice sought to

recover any losses that the Bank incurred in the South Carolina Action, including for

attorneys‟ fees and costs. The Bank contended that Freestone was liable to the Bank on

theories of contribution, indemnification, apportionment, breach of the Trust Agreement,

negligence, gross negligence, negligent misrepresentation, and fraud.

But the Bank did more than just file claims notices. On January 15, 2016, the Bank

moved in this court for relief from the Anti-Suit Injunction so that it could name

Freestone as a third-party defendant in the South Carolina Action. Through that litigation,

the Bank seeks to obtain a judgment against Freestone that will establish its status as a

general creditor and the amount of its claim. The Bank has represented that if it is

successful, it will not seek to execute on the judgment but will return to this court to

liquidate its claims as part of the Claims Process.

On January 29, 2016, the Bank filed a third-party complaint in the South Carolina

Action that named Southport and Burns, among others, as third-party defendants.

Because of the Anti-Suit Injunction, the Bank did not name Freestone as a third-party

defendant, but the allegations in its pleading identified Freestone as a wrongdoer

alongside Southport and Burns. According to those allegations, Freestone, Southport, and

Burns

directed the conduct that underlies Companion‟s claims. They caused the
trusts to acquire assets that Companion now says were ineligible, they gave
valuations that Companion now says were inflated, and they made
representations and warranties that Companion now says were false.
Meanwhile, Burns and his Southport affiliates created the assets, sold or
contributed the assets to the reinsurance trust[], and received the financial
benefits of the transactions.

9
Dkt. 256, Ex. A ¶ 2. The Bank asserted that if it was liable to Companion, then Southport

and Burns should be liable for apportionment, contribution, and contractual and equitable

indemnification.

II. LEGAL ANALYSIS

The question to be answered is whether this court should lift the Anti-Suit

Injunction so that the Bank can litigate third-party claims against Freestone in the South

Carolina Action, outside of the Claims Process. This decision does not take any position

on the merits of the Bank‟s claims, including the allegations against Freestone. This

decision assumes that the claims are fairly litigable.

There is a dearth of case law addressing when a court overseeing a liquidation

proceeding under the Uniform Act should lift an anti-suit injunction. Only one Delaware

decision has considered such a motion. See In re Rehab. of Manhattan Re-Ins. Co.

(Manhattan Re), 2011 WL 4553582 (Del. Ch. Oct. 4, 2011). The Manhattan Re decision

holds, and the parties agree, that this court has the “the discretion to lift the preliminary

injunction.” Id. at *8. The Manhattan Re decision also holds, and the parties agree, that

the central inquiry is whether lifting the injunction “would not be inconsistent with the

[Uniform Act] or its goal[s].” Id. at *5. Unfortunately, the Manhattan Re decision did not

provide a framework for applying this standard or identify factors to consider. The

parties‟ initial round of briefing did not offer any assistance either.

In an effort to find guidance in a seemingly similar legal scenario, the court

requested supplemental briefing from the parties on the factors that bankruptcy courts

consider when deciding whether to lift the automatic stay to permit lawsuits to proceed in

10
other jurisdictions. Important distinctions between a bankruptcy proceeding and an

insurance company liquidation prevent the wholesale adoption of the bankruptcy model.

Most significantly, an insurance company liquidation involves a highly regulated debtor,

and the Uniform Act evidences an overarching policy of centralizing proceedings in the

domiciliary jurisdiction under the direction of the chief insurance regulator for that state.

If anything, therefore, it should be more difficult to obtain relief from an anti-suit

injunction in a liquidation proceeding than it is to obtain relief from the automatic stay in

a bankruptcy proceeding.

Informed by bankruptcy court precedent, this decision weighs multiple factors in

determining whether to lift the Anti-Suit Injunction to enable the Bank to name Freestone

as a third-party defendant in the South Carolina Action. Having done so, this decision

concludes that the balancing counsels against lifting the Anti-Suit Injunction. The Bank‟s

motion is therefore denied.3

3
This decision thus assumes for purposes of analysis that the Uniform Act permits
a claimant that is subject to this court‟s jurisdiction or is a citizen of a reciprocal state to
litigate a claim against an insolvent insurer in a civil action outside of the liquidation
process, whether via a claim, counterclaim, or third-party claim. It therefore treats the
operative question as whether, in its discretion, this court should permit the Bank to do
so. In my view, the better reading of Sections 5914, 5915, and 5916 of the Uniform Act is
that once an insurer has been placed in liquidation, claimants that are citizens of either the
domiciliary state or a reciprocal state or otherwise subject to the jurisdiction of the
domiciliary court only can pursue claims by filing claims notices either with the
domiciliary receiver or, if applicable, an ancillary receiver appointed in a reciprocal state
through ancillary proceedings. 18 Del. C. §§ 5914-5916. A series of federal and state
decisions have interpreted the provisions of the Uniform Act in this fashion. See, e.g.,
Sears & Roebuck & Co. v. Northumberland Gen. Ins. Co., 617 F. Supp. 88, 89 (N.D. Ill.
1985); Emons Indus., Inc. v. Liberty Mut. Fire Ins. Co., 545 F. Supp. 185, 190-91
(S.D.N.Y. 1982); Ins. Affiliates Inc. v. O’Connor, 522 F. Supp. 703, 706 (D. Colo. 1981);

11
Ace Grain Co v. R.I. Ins Co., 107 F. Supp. 80, 82-83 (S.D.N.Y. 1952), aff’d, 199 F.2d
758 (2d Cir. 1952); Fin. Int’l Life Ins. Co. v. Beta Tr. Corp. Ltd., 405 So.2d 306, 308
(Fla. Dist. Ct. App. 1981); Integrity Ins. Co. v. Martin, 769 P.2d 69, 70 (Nev. 1989);
Superintendent of Ins. of N.Y. v. Int’l Equip. Leasing, Inc., 588 A.2d 863, 886 (N.J.
Super. Ct. App. Div. 1991); Zullo Lumber v. King Constr., 368 A.2d 987, 990-91 (N.J.
Super. Ct. Law Div. 1976); Levin v. Nat’l Colonial Ins. Co., 806 N.E.2d 473, 478-79
(N.Y. 2004); G.C. Murphy Co. v. Reserve Ins. Co., 429 N.E.2d 111, 115 (N.Y. 1981).
Commentators have expressed the same view. See Receiver’s Handbook, supra, at 17, 28;
Eric P. Berg, Injunctions Barring Suit Against Insolvent Insurance Companies: State
Cooperation Through Tit-for-Tat Strategy, 57 Rutgers L. Rev. 1377, 1386 (2005); John
N. Gavin, Competing Forums for the Resolution of Claims Against an Insolvent Insurer,
23 Tort & Ins. L.J. 604, 606-07 (1988); Stephen W. Schwab et al., Cross-Border
Insurance Insolvencies: The Search for a Forum Concursus, 12 U. Pa. J. Int‟l. Bus. L.
303, 319 (1991). So do black letter authorities. See 43 Am. Jur. 2d Insurance § 86 (2016);
44 C.J.S. Insurance §§ 241, 248 (2016); 1 Steven Plitt et al., Couch on Insurance §§
6:14, 6:15 (3d ed. 2016) [hereinafter Couch on Insurance].

The Bank reads Manhattan Re as authorizing a claimant to pursue a civil claim
against a delinquent insurer in a reciprocal jurisdiction outside of the liquidation process
as long as the claim is in personam, rather than in rem, and so long as this court has not
entered an anti-suit injunction or lifts the injunction to permit the claim to proceed. Such
a reading would conflict with the authorities cited in the preceding paragraph. I do not
read Manhattan Re so broadly.

First, Manhattan Re did not involve a claim that otherwise would have been
handled through the Claims Process. As discussed in detail below, Manhattan Re
involved an objection to a plan of rehabilitation that turned on whether and to what
degree a particular asset was the property of the delinquent insurer‟s estate. See infra Part
II.E. That issue was part of the marshaling of the delinquent insurer‟s assets and was
logically separate from and prior to the adjudication of claims. As a temporal matter in
Manhattan Re, the question of ownership was deferred until the Commissioner sought
approval of the plan of rehabilitation, but one can readily infer that it was deferred for
administrative convenience, in the hope that the parties would resolve the issue, and
because the ownership issue did not affect the handling of any other claims. The
ownership issue that Manhattan Re held could be adjudicated outside of the Claims
Process thus would not have been handled through the Claims Process in any event.

Second, Manhattan Re at most might be read to permit claims that are secured or
involve statutory deposits to be litigated outside of the Claims Process. The objector in
Manhattan Re was a reinsurer who argued that its claims were secured by the cash
proceeds from a letter of credit that the delinquent insurer had drawn and placed in a

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A. The Centralized, State-Based Regulatory Scheme For Insurer Liquidations

Under the Manhattan Re decision, the overarching inquiry when considering

whether to lift an anti-suit injunction in a delinquency proceeding is whether doing so

“would not be inconsistent with the [Uniform Act] or its goal[s].” 2011 WL 4553582, at

*5. An understanding of the Uniform Act and the policies it seeks to achieve is therefore

essential to determining whether to lift the stay.

designated account. The objector argued that the question of ownership was an in
personam claim that could be litigated outside of the delinquency proceeding, citing in
support the provisions of the Uniform Act which permit owners of claims against special
deposits or other secured claims to assert their claims in ancillary proceedings. The
concept of ancillary proceedings in the Uniform Act contemplates an ancillary Claims
Process handled by an ancillary receiver in a reciprocal state. See Receiver’s Handbook,
supra, at 17-18. The Manhattan Re decision, however, appears to have accepted the
claimant‟s argument that these provisions contemplated any type of proceeding outside of
the delinquency proceeding in the domiciliary state. 2011 WL 4553582, at *7. Were one
to embrace that view, it only would extend to claims that are secured or involve statutory
deposits. It would not apply to general creditors like the Bank.

In this case, the Bank has a contingent claim which, if proven, would give it the
status of a general creditor. South Carolina appears to be a reciprocal state. Compare 18
Del. C. § 5901(8), with S.C. Code Ann. §§ 38-27-50(15). Under the plain language of the
Uniform Act, it appears that the Bank must pursue its claims exclusively through the
Claims Process in this state, unless the chief insurance regulator in South Carolina has
brought ancillary proceedings and been appointed as an ancillary receiver, in which case
the Bank could file claims notices with the ancillary receiver. There is no indication that
an ancillary receiver has been appointed, and the Bank is not proposing to pursue claims
with an ancillary receiver in South Carolina.

Although the Uniform Act appears to foreclose the Bank‟s proposed course as a
matter of law, at a minimum for general creditors in reciprocal states, this decision does
not deny the Bank‟s motion on that basis. This decision assumes for purposes of analysis
that the Bank could proceed against Freestone in South Carolina absent the Anti-Suit
Injunction and limits its holding to the discretionary question of whether to lift the Anti-
Suit Injunction.

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 “Insurer insolvency is regulated by state law rather than the federal Bankruptcy

Code.” Cohen v. State, 89 A.3d 65, 72 (Del. 2014) (footnote omitted). In 1945, Congress

adopted the McCarran-Ferguson Act, 15 U.S.C. §§ 1011-15, to reverse a decision by the

United States Supreme Court that applied the Sherman Act to insurance companies. See

United States v. S.-E. Underwriters Ass’n, 322 U.S. 533 (1944). Section 1 of the

McCarran-Ferguson Act declares that state regulation of the “business of insurance is in

the public interest.” 15 U.S.C. § 1011. Section 2(a) declares that the “business of

insurance . . . shall be subject” to state laws relating to the “regulation . . . of such

business.” 15 U.S.C. § 1012(a). Section 2(b) states that “[n]o Act of Congress shall be

construed to invalidate, impair, or supersede any law enacted by any State for the purpose

of regulating the business of insurance.” 15 U.S.C. § 1012(b). The United States Supreme

Court has recognized that “[o]bviously Congress‟ purpose was broadly to give support to

the existing and future state systems for regulating and taxing the business of insurance.”

Prudential Ins. Co. v. Benjamin, 328 U.S. 408, 429 (1946).

In addition to Congress‟ decision in the McCarran-Ferguson Act to leave the

“business of insurance” to the states, Congress carved out insurance companies from the

purview of federal bankruptcy law (the “Bankruptcy Code”). 11 U.S.C. § 109(b). As a

result, the states have primary responsibility for regulating insurance, including insurance

company insolvency proceedings.

To address this important area, “[m]any states, including Delaware, have adopted

a form of the Uniform Insurers Liquidation Act.” Cohen, 89 A.3d at 72. The National

Conference of Commissioners on Uniform State Laws (“NCCUSL”) promulgated the

14
Uniform Act in 1939 with the assistance of the American Bar Association, the National

Association of Insurance Commissioners (“NAIC”), the insurance departments of several

states, and other qualified experts. See Commissioner‟s Prefatory Note, Uniform Insurers

Liquidation Act, 9B U.L.A. 284, 286 (1966). Since then, as many as thirty-two

jurisdictions have adopted it.4 When the General Assembly enacted the Uniform Act in

4
Lac D’Amante du Quebec, Ltee. v. Am. Home Assur. Co., 864 F.2d 1033, 1039
(3d Cir. 1988). Research has not uncovered a source that tracks the number of
jurisdictions that currently adhere to the Uniform Act. NCCUSL no longer maintains the
Uniform Act, having ceded the task to the NAIC. The NAIC has promulgated two more
recent statutes: the Insurers Rehabilitation and Liquidation Model Act (the “Model Act”),
and the Insurer Receivership Model Act (“IRMA”). Receiver’s Handbook, supra, at 5.

The NAIC initially adopted the Model Act in 1968 as an updated version of the
Uniform Act, and then amended it several times before it was replaced by IRMA in 2005.
Id. at 463. “Ten sections (54-63) of the Model Act adopt much of the [Uniform Act], as
well as its policy objective: centralization of delinquency proceedings in the domiciliary
jurisdiction.” Id. at 466-67; accord Schwab, supra, at 325 (explaining that the Model Act
adopts “much of the basic terminology and procedure of the [Uniform Act], as well as the
same universalist policy objective: centralization of delinquency proceedings in the
domiciliary jurisdiction”); see Berg, supra, at 1379, 1384 (describing the Model Act as
“more detailed” and “more comprehensive” than the Uniform Act but as providing “a
framework supporting the same policies”). “Differences between the two statutes derive
from the NAIC‟s efforts to clarify and improve [Uniform Act] provisions.” Schwab,
supra, at 325. The NAIC promulgated IRMA in 2005 as an updated version of the Model
Act. Receiver’s Handbook, supra, at 463.

One authority states that “each of the fifty states and the District of Columbia have
enacted a version of either the” Uniform Act or the Model Act. 5 J. David Leslie &
Martin C. Pentz, Law & Practice of Insurance Coverage Litigation § 58:2 (2016).
Another authority observes that in 2005, twenty-three states still followed the Uniform
Act, while thirty-three states had adopted the Model Act, either in place of or in addition
to the Uniform Act. Berg, supra, at 1304. IRMA does not appear to have changed matters
much. Texas and Utah have adopted IRMA in full, and Maine, Oklahoma, Missouri, and
Tennessee have adopted parts of it. NAIC Model Regulation Serv., Insurer Receivership
Model Act, at ST-555-3 to -8 (2015), http://www.naic.org/store/free/MDL-555.pdf.

15
1953, it instructed that the Delaware statute be “so interpreted and construed as to

effectuate its general purpose to make uniform the laws of those states that enact it.”5

The Uniform Act “was enacted in response to the economic depression

experienced in the United States in the 1920s and 30s. The depression resulted in the

forced liquidation or reorganization of numerous insurance companies, and the ensuing

receivership proceedings were plagued by many problems.” Schwab, supra, at 310.

Among other things, differences in the state-law regimes “resulted in inequality in

distribution to creditors because of variation from state to state in the laws relating to

priorities and in the relative proportions of local assets to local creditors.” 1 Couch on

Insurance § 6:14. The Uniform Act “was enacted in order to avoid the confusion inherent

in the forced liquidation of a multistate insurance corporation, especially with regard to

assets in foreign jurisdictions.” Jay M. Zitter, Annotation, Validity, Construction, and

Application of Uniform Insurers Liquidation Act, 44 A.L.R. 5th 683 (1996). The drafters

identified six specific “embarrassments” that the Uniform Act sought to address:

(1) the inefficient administration of the liquidation process caused by the
appointment of receivers other than the various State Insurance
Commissioners;

In light of this history, the jurisdictions that have adopted the Uniform Act, the
Model Act, and IRMA can be regarded generally as having enacted versions of the
Uniform Act and hence as reciprocal states, at least absent a specific showing that a
particular jurisdiction departed materially from the models. See Receiver’s Handbook,
supra, 5, 463-69.
5
18 Del. C. § 5920(b). The entirety of Title 18, Chapter 59 of the Delaware code
is devoted to insurance regulation. Technically only Sections 5901(2)-(13), 5902, 5903,
and 5913-5920 implement the Uniform Act. 18 Del. C. § 5920(a).

16
 (2) the lack of authority on the part of domiciliary receivers to proceed
in non-domiciliary States leading to the dissipation of assets outside
the home State and enabling out-of-State debtors to avoid their
obligations;

(3) the ineffective administration of the liquidation process caused by
differences in the laws of the various States regarding the title and
right to possession of the property of a defunct nonresident insurer;

(4) the serious inconvenience in proving claims experienced by creditors
living outside the defunct insurer‟s domicile;

(5) the problems generated by diverse State laws governing preferences
such as wage claims, compensation claims and tax claims; and

(6) the inequity resulting from preferences obtained by diligent
nondomiciliary creditors with advance information of an insurer‟s
impending insolvency.

G.C. Murphy Co. v. Reserve Ins. Co., 429 N.E.2d 111, 114-15 (N.Y. 1981) (formatting as

separate paragraphs added). To address these and other problems, the Uniform Act

centralized the liquidation proceeding under the control of the chief insurance regulator in

the domiciliary state. Receiver’s Handbook, supra, at 464.

Multiple features of the Uniform Act evidence the importance of centralizing the

liquidation of an insurer under the control of the chief insurance regulator in the

domiciliary jurisdiction. First, only the domiciliary regulator has authority to bring a

statutory liquidation proceeding within the domiciliary jurisdiction, and such a

proceeding is the exclusive means for liquidating an insolvent insurer. Delaware‟s statute

illustrates both concepts. It gives the Commissioner sole control of the initiation of

delinquency proceedings by providing that

[t]he Commissioner shall commence any such proceedings by application
to the court for an order directing the insurer to show cause why the
Commissioner should not have the relief prayed for. On the return of such

17
 order to show cause and after a full hearing, the court shall either deny the
application or grant the application, together with such other relief as the
nature of the case and the interests of the policyholders, creditors,
stockholders, members, subscribers or the public may require.

18 Del. C. § 5903. The words “such proceedings” refer to the immediately preceding

statutory section, which makes statutory delinquency proceedings the exclusive means

for liquidating a Delaware-domiciled insurer:

Delinquency proceedings pursuant to this chapter shall constitute the sole
and exclusive method of liquidating, rehabilitating, reorganizing or
conserving an insurer, and no court shall entertain a petition for the
commencement of such proceedings unless the same has been filed in the
name of the State on the relation of the Commissioner.

Id. § 5902(d).

Second, under the Uniform Act, only the chief insurance regulator in the

domiciliary jurisdiction can serve as the receiver for the insolvent insurer. The Delaware

statute again exemplifies this approach by stating:

Whenever under this chapter a receiver is to be appointed in delinquency
proceedings for an insurer, the court shall appoint the Commissioner as
such receiver. The court shall order the Commissioner forthwith to take
possession of the assets of the insurer and to administer the same under the
orders of the court.

Id. § 5913(a).

Third, the Uniform Act mandates that the chief insurance regulator takes charge of

the insolvent insurer‟s business, marshals its assets, and oversees the insolvency

proceeding. The Delaware statute provides as follows:

An order to liquidate the business of a domestic insurer shall direct the
Commissioner forthwith to take possession of the property of the insurer, to
liquidate its business, to deal with the insurer‟s property and business in the
Commissioner‟s own name as Insurance Commissioner or in the name of

18
 the insurer, as the court may direct, and to give notice to all creditors who
may have claims against the insurer to present such claims.

Id. § 5911(a). Elsewhere, the Delaware statute reiterates this point by stating that when

the Commissioner is appointed as receiver,

the Commissioner shall be vested by operation of law with the title to all of
the property, contracts and rights of action and all of the books and records
of the insurer, wherever located, as of the date of entry of the order
directing the Commissioner to . . . liquidate a domestic insurer . . . , and the
Commissioner shall have the right to recover the same and reduce the same
to possession, except that ancillary receivers in reciprocal states shall have,
as to assets located in their respective states, the rights and powers which
are herein prescribed for ancillary receivers appointed in this State as to
assets located in this State.

Id. § 5913(b). The Delaware statute further provides that

[u]pon taking possession of the assets of an insurer, the domiciliary receiver
shall, subject to the direction of the court, immediately proceed to conduct
the business of the insurer or to take such steps as are authorized by this
chapter for the purpose of . . . liquidating . . . the affairs or assets of the
insurer.

Id. § 5913(e).

Fourth, the Uniform Act places the chief insurance regulator at the center of the

Claims Process, which establishes a mechanism for filing, processing, and paying claims

in accordance with a statutory prioritization scheme. The statute mandates that all claims

be filed with the Commissioner on or before a bar date set by the court. See id. § 5917(b)

(“All claims filed in this State shall be filed with the receiver, whether domiciliary or

ancillary, in this State on or before the last date for filing as specified in this chapter.”).

Notably, the statute does not contemplate that the court will resolve the claims in the first

instance. Instead, the statute envisions that the initial step is for the Commissioner to

19
make a recommendation regarding the claim; only then does the court entertain the claim

and rule on it.6 A sense of the complexity of the Claims Process can be gleaned from the

Receiver’s Handbook, which devotes sixty-five pages to the subject. See Receiver’s

Handbook, supra, at 239-304.

The Uniform Act recognizes that because of the jurisdictional limitations of the

domiciliary state, it may be necessary for the chief regulator in the domiciliary state to

coordinate with insurance regulators in other states by having those regulators serve as

ancillary receivers if the insolvent insurer has significant assets located in their

jurisdictions.7 When this occurs and an ancillary receiver has been appointed in another

6
The relevant sections state:

(c) Within 10 days of the receipt of any claim or within such further period
as the court may fix for good cause shown, the receiver shall report the
claim to the court, specifying in such report the receiver‟s recommendation
with respect to the action to be taken thereon. Upon receipt of such report,
the court shall fix a time for hearing the claim and shall direct that the
claimant or the receiver, as the court shall specify, shall give such notice as
the court shall determine to such persons as shall appear to the court to be
interested therein. All such notices shall specify the time and place of the
hearing and shall concisely state the amount and nature of the claim, the
priorities asserted, if any, and the recommendation of the receiver with
reference thereto.

(d) At the hearing, all persons interested shall be entitled to appear and the
court shall enter an order allowing, allowing in part, or disallowing the
claim. Any such order shall be deemed to be an appealable order.

Id. § 5917(c) & (d).
7
See Receiver’s Handbook, supra, at 17-18, 27-28; cf. 18 Del. C. § 5914(a)
(establishing reciprocal mechanism in Delaware for insolvency proceedings involving a
foreign insurer by providing that “[w]henever under this chapter an ancillary receiver is

20
jurisdiction, the Uniform Act authorizes a claimant in the ancillary state to present its

claim to the ancillary receiver as part of a statutory Claims Process being conducted in

the ancillary state.8 But even when this occurs and an ancillary proceeding takes place, it

is the respective insurance regulators that remain in charge of the process. Moreover, the

final allowance awarded to any claim pursued in the ancillary proceedings is conclusive

only “as to its amount” and “its priority, if any, against special deposits or other security

located within the ancillary state.”9 To recover against the general assets of the insolvent

insurer or any property other than special deposits or security located within the ancillary

state, the claimant must go through the Claims Process in the domiciliary state. See

Receiver’s Handbook, supra, at 17, 28.

to be appointed in delinquency proceedings for an insurer not domiciled in this State, the
court shall appoint the Commissioner as ancillary receiver”); id. § 5914(b) (providing
that in a case where the Commissioner or the court concludes that an ancillary receiver in
Delaware is not warranted, “[t]he domiciliary receiver for the purpose of liquidating an
insurer domiciled in a reciprocal state shall be vested by operation of law with the title to
all of the property, contracts and rights of action and all of the books and records of the
insurer located in this State” and shall have additional specified powers within the State
of Delaware).
8
See 18 Del. C. § 5915(b)(1); see also id. § 5916 (establishing a reciprocal
structure for Delaware residents when delinquency proceedings have been commenced in
another state against an insurer domiciled in that state and Delaware residents wish to
assert claims against that insurer).
9
Id. § 5915(b)(1). A special deposit claim is a type of secured claim where the
security takes the form of a deposit required by state law. “The regulatory statutes of
many states require that domestic and foreign insurers provide some security to the state
in the form of official bonds, securities, or other devices, to ensure the performance of
their obligations. These deposits may be considered to be a trust for policyholders.” 1
Couch on Insurance § 6:17.

21
 Another feature of the Uniform Act enables the chief regulator in the domiciliary

jurisdiction to conserve the insolvent insurer‟s assets and avoid the expenditure of scarce

resources on claims that may not receive any distribution, regardless of their strength. To

ensure the fair and ratable treatment of claims, and to implement important regulatory

policies, the Uniform Act establishes a priority scheme for nine different classes of

claims against the general assets of the insolvent insurer.10 Distributions from the

insolvent insurer‟s assets are paid out to each class in order of priority and ratably within

each class. The nine classes are:

 Class I: The costs and expenses of administration expressly approved by the
receiver.

 Class II: The reasonable and necessary administrative expenses of the Delaware
Insurance Guaranty Association, the Delaware Life and Health Insurance
Guaranty Association, or any similar organization in another state.

 Class III: Claims by policyholders, beneficiaries, and insureds arising from
insurance policies written by the insolvent insurer and within coverage limits;

10
See 18 Del. C. § 5918. The Uniform Act recognizes two types of claims against
specific property of the insurer: special deposit claims and secured claims. The owner of
a special deposit claim is given priority against its special deposit in accordance with the
statutes governing the creation and maintenance of the special deposit. See id. § 5918(c).
If there is a deficiency, the owner of the special deposit claim “may share in the general
assets, but such sharing shall be deferred until general creditors and also claimants
against other special deposits who have received smaller percentages from their
respective special deposits have been paid percentages of their claims equal to the
percentage paid from the special deposit.” Id.

The owner of a secured claim is given a choice. The owner may either (i)
“surrender his or her security and file a claim as a general creditor” or (ii) “the claim may
be discharged by resort to the security, in which case the deficiency, if any, shall be
treated as a claim against the general assets of the insurer on the same basis as claims of
unsecured creditors.” Id. § 5918(d).

22
 liability claims against the insolvent insurer‟s insureds that are within the scope of
coverage and not in excess of policy limits; and policyholder‟s claims for refunds
of unearned premium, but excluding (i) claims arising under reinsurance contracts,
including any claims for reinsurance premiums, and (ii) claims by insurers,
insurance pools, or underwriting associations for contribution, indemnity, or
subrogation, equitable or otherwise.

 Class IV: Taxes owed to the United States.

 Class V: Claims of the insolvent insurer‟s employees, other than its officers and
directors, for compensation actually owing for services rendered within the three
months before the delinquency proceeding and not exceeding $1000 per
employee.

 Class VI: Claims of general creditors, including claims of ceding and assuming
insurers and claims by insurers, insurance pools, or underwriting associations for
contribution, indemnity, or subrogation, equitable or otherwise.

 Class VII: Claims that otherwise would qualify for a higher priority class but
which were not timely filed.

 Class VIII: Surplus or contribution notes and similar obligations.

 Class IX: Claims of stockholders or other owners in that capacity.

See id. § 5918.

Under this priority scheme, general creditors are unlikely to recover from an

insolvent insurer. Moreover, the Uniform Act imposes an additional limitation on any

claim that remained contingent on the bar date. In the language of the Delaware statute,

No contingent and unliquidated claim shall share in a distribution of the
assets of an insurer which has been adjudicated to be insolvent by an order
made pursuant to this chapter, except that such claim shall be considered, if
properly presented, and may be allowed to share where:

(1) Such claim becomes absolute against the insurer on or before the
last day for filing claims against the assets of such insurer; or

23
 (2) There is a surplus and the liquidation is thereafter conducted
upon the basis that such insurer is solvent.11

A general creditor whose claim remained contingent on the bar date therefore cannot

recover unless the insurer proves actually to have been solvent.

Taken together, the combination of (i) a centralized claims notice procedure, (ii)

the statutory prioritization scheme, and (iii) the initial evaluation of claims by the

Commissioner has an important implication for the efficient handling of a liquidation:

Depending on the extent of the insurer‟s insolvency, it may not be worthwhile to litigate

low priority claims. For example, if the insurer lacks sufficient assets to cover its

policyholders and any outstanding claims against them under Class III, then any general

creditors in Class VI will not receive any distribution, regardless of the strength of their

claims. Likewise, the holders of any claims that remained contingent on the bar date will

not recover anything at all, because under such a scenario, the insolvent insurer does not

have a surplus. By placing the Commissioner in charge of the liquidation and having the

court act on the Commissioner‟s recommendation, the Uniform Act limits the extent to

which resources might be wasted resolving claims that have no prospect of receiving a

distribution.

As these statutory provisions demonstrate, the Uniform Act sought to “centralize

the delinquency proceedings by vesting power in a single domiciliary receiver.”

11
Id. § 5928(a). A different rule applies to a contingent claim against a person
insured under a policy issued by the insolvent insurer. See id. § 5928(b). Because of the
nature of the Bank‟s claims, that subsection is not relevant here.

24
Receiver’s Handbook, supra, at 464. “The policy behind encouraging centralized

delinquency proceedings is to ensure that . . . the assets of the insurance company are

protected to assess liabilities, necessary for equitable distribution to all interested

parties.” Berg, supra, at 1382-83 (footnote omitted). “[K]eeping all actions confined to a

single forum . . . enables accurate assessment of existing liabilities, recognizing that the

receiver is in the best position to assess and account for all the assets and liabilities of the

insurance company for the sake of its creditors and policyholders.” Id.

B. The Role Of Injunctive Relief Under The Uniform Act

Injunctions are potent tools that courts use to enforce legal rights, prevent harm,

and preserve the status quo pending a final adjudication on the merits. As a court of

equity, this court has inherent authority to issue injunctive relief. See 43A C.J.S.

Injunctions § 2 (2016). The power extends to injunctions that bar parties from suing in

other forums. Id. § 103. Nevertheless, in the absence of a clear, mandatory, and

bargained-for forum selection clause, this court traditionally has proceeded with caution

when issuing anti-suit injunctions and has shown comity by striving to permit a sister

court to consider first whether to stay a competing proceeding.12

12
Compare Ingres Corp. v. CA, Inc., 8 A.3d 1143, 1146 (Del. 2010) (affirming
issuance of anti-suit injunction to enforce mandatory forum selection clause in bilateral
contract), with Household Int’l, Inc. v. Eljer Indus., Inc., 1995 WL 405741, at *1 (Del.
Ch. June 19, 1995) (Allen, C.) (issuing anti-suit injunction only after twice declining to
do so because of desire to show comity to courts of a sister state). See generally
Household Int’l, Inc. v. Eljer Indus., Inc., 1994 WL 469169, at *3 (Del. Ch. Aug. 12,
1994) (Allen, C.) (explaining that a court “that regularly issues [anti-suit injunctions] . . .
risks giving substantial offense to the judicial systems of other states, most often for no
reason”); RJR Nabisco, Inc. S’holders Litig., 576 A.2d 654, 662 (Del. Ch. 1990) (Allen,

25
 Although the judicial power to enforce the legal obligations established by the

Uniform Act would exist independently, the Uniform Act takes the additional step of

granting the court overseeing the delinquency proceeding specific statutory authority to

enforce those obligations through injunctive relief, including, if necessary, injunctions

granted ex parte and without notice. The operative provision states:

Upon application by the Commissioner for such an order to show cause, or
at any time thereafter, the court may without notice issue an injunction
restraining the insurer, its officers, directors, stockholders, members,
subscribers, agents and all other persons from the transaction of its business
or the waste or disposition of its property until the further order of the
court.

18 Del. C. § 5904(a). See generally Cohen, 89 A.3d at 90.

The Uniform Act likewise takes the additional step of granting the court

overseeing the delinquency proceedings specific statutory authority to issue anti-suit

injunctions. That power too would exist independently, and its exercise would be

warranted in connection with the liquidation of an insurer under black letter principles of

law which recognize that an anti-suit injunction is appropriate “(1) to address a threat to

the court‟s jurisdiction; (2) to prevent evasion of important public policy; (3) to prevent a

multiplicity of suits; or (4) to protect a party from vexatious or harassing litigation.” 43A

C.J.S. Injunctions § 103 (2016). Nevertheless, the Uniform Act provides explicitly that

[t]he court may at any time during a proceeding under this chapter issue
such other injunctions or orders as may be deemed necessary to prevent . . .
the commencement or prosecution of any actions or the obtaining of

C.) (explaining role of comity for practice of issuing anti-suit injunctions and noting that
comity generally calls for permitting a sister court to rule on an application for a stay).

26
 preferences, judgments, attachments or other liens or the making of any
levy against the insurer or against its assets or any part thereof.

18 Del. C. § 5904(b).

The plain language of Section 5904(b) makes the issuance of an anti-suit

injunction discretionary. Manhattan Re, 2011 WL 4553582, at *8. But the fact that the

drafters of the Uniform Act took pains to specify the existence of this authority, which

the domiciliary court otherwise would have, suggests to my mind that they viewed the

issuance of anti-suit injunctions as consistent with the public policies animating the

Uniform Act and wished to signal that a court should exercise that authority in a

delinquency proceeding more readily than it would in a different context. Because the

Uniform Act seeks to centralize the liquidation process in the domiciliary jurisdiction

under the control of the chief insurance regulator for that jurisdiction, the issuance of

anti-suit injunctions directly serves the core public policy goal of the statute. Anti-suit

injunctions issued under the Uniform Act, particularly as to proceedings in reciprocal

states, are thus categorically different from and should be treated differently than a

request for an anti-suit injunction in a plenary proceeding outside of the specialized,

regulatory context of an insurance company delinquency proceeding.

Perhaps unsurprisingly, anti-suit injunctions are routinely entered in delinquency

proceedings.13

13
Receiver’s Handbook, supra, at 15 (“It is important for the order of liquidation
to include certain other items . . . . These items typically include provisions for . . . [the]
enjoinment of other parties from proceeding with actions against the liquidator, the
insurer or policyholders.”); id. (explaining that liquidation order usually contains a

27
 A liquidator of an insolvent insurer is likely to find that, at the outset of
insolvency proceedings, such insurer is defending a substantial number of
actions in a number of different forums. . . .

In almost all cases, it will be in the estate‟s interest to obtain a stay or
dismissal of such proceedings and to require such claims to be presented
and determined in the liquidation proceedings. . . . [T]his result preserves
the authority of the liquidation court and allows the liquidator and the court
to apply their expertise to the issues presented. The liquidation of claims in
the liquidation proceedings also avoids outside interference in the
liquidation proceedings and the possibility of conflicting rulings, piecemeal
litigation of claims and unequal treatment of claimants. Any such
consolidation of claims would also obviate the delay inefficiency and waste
of assets which would occur if the estate were required to defend claims in
any forum.

Gavin, supra, at 604; accord Lac D’Amiante, 864 F.2d at 1047 n.16 (quoting earlier

version of Gavin article).

It seems likely that the willingness of courts to issue anti-suit injunctions in part

reflects the substance of a mandatory provision appearing later in the Uniform Act, which

bars efforts by claimants to obtain attachments or other liens against the insolvent insurer

or its assets. In the language of the Delaware statute, that provision states that “[d]uring

the pendency of delinquency proceedings in this or any reciprocal state, no action or

proceeding in the nature of an attachment, garnishment or execution shall be commenced

or maintained in the courts of this State against the delinquent insurer or its assets.” 18

provision “[e]njoining lawsuits in other courts, whether in the same jurisdiction or
elsewhere”); Gavin, supra, at 609 (“At the outset of the liquidation proceedings, the
liquidation court typically issues an injunction which enjoins all persons from bringing or
further prosecuting any action against the insolvent insurer or its liquidator.”); see Berg,
supra, at 1379 (“Injunctions are the most common tool to ensure centralization of
proceedings and protection of all interested parties.”).

28
Del. C. § 5919. But the policies underlying the broad statutory authorization for anti-suit

injunctions in delinquency proceedings go further than simply a desire to stop extra-

jurisdictional collection efforts. The obvious purpose of the broader authority granted by

Section 5904(b) is to enable the court “to stay all pending proceedings and enjoin the

commencement of new proceedings against the insurance company to avoid interference

with the insurance company‟s assets.” Berg, supra, at 1379. “Like the Uniform Act, the

purpose of such injunctions is to prevent premature or inequitable distribution of the

insolvent insurer‟s assets and to prevent delay, disruption and the waste of assets which

would occur if the liquidator were required to defend actions in any court where they

were brought.” Gavin, supra, at 609-10.

As both the Delaware Supreme Court and this court have recognized, the means

by which lawsuits in other jurisdictions can interfere with an insolvency proceeding are

not limited to collection efforts. See Cohen, 89 A.3d at 81 n.73; Manhattan Re, 2011 WL

4553582, at *3; Checker Motors Corp. v. Exec. Life Ins. Co., 1992 WL 29806, at *3 (Del.

Ch. Feb. 13, 1992), aff’d, 615 A.2d 530 (Del. 1992). Forcing the Commissioner to defend

lawsuits in multiple jurisdictions dissipates the distressed insurer‟s assets by necessitating

expenditures of limited resources on foreign litigation. It also diverts the Commissioner‟s

attention from managing the insolvent insurer‟s affairs, marshaling its assets, and

overseeing the Claims Process. Particularly if the claims pursued in the foreign litigation

will have a low priority such that their owners will be unlikely to recover even if

successful, the practical result of the foreign litigation is to dissipate the insolvent

29
insurer‟s limited financial resources for no purpose. Rather than funding distributions to

higher priority claimants, those resources fund legal fees and other transaction costs.

Numerous other federal and state courts have recognized the importance of anti-

suit injunctions in limiting the extent to which claims against insolvent insurers can be

litigated outside of the delinquency proceeding.14 Using anti-suit injunctions to

consolidate proceedings in the domiciliary jurisdiction also “eliminates the risk of

conflicting rulings, piecemeal litigation of claims, and unequal treatment of claimants, all

of which are of particular interest to insurance companies and policy holders.” 15 Put

simply, “[f]or efficient rehabilitation or liquidation, the proceedings must be centralized

in a single forum for the purpose of orderly assessment of creditors‟ claims and effective

14
See Law Enf’t Ins. Co. v. Corcoran, 807 F.2d 38, 44 n.10 (2d Cir. 1986) (“[B]y
relegating claimants to a single proceeding centered in the state of domicile of the
insolvent insurer, we further the state policies of uniformity that have led well over half
of the states to join New York in adopting the [Uniform Act].”); Smith v. Farm & Home
Life Ins. Co., 506 S.E.2d 104, 107 (Ga. 1998) (“[A] central forum is necessary for the
orderly liquidation of an insolvent insurer‟s assets. Otherwise, creditors of an insolvent
insurance company will race to their respective state forums in an effort to be among the
first to levy against the insurer‟s assets located in that state, to the great detriment of
innocent policy holders who might be unaware that their interests are being usurped.”);
Bard v. Charles R. Myers Ins. Agency, Inc., 839 S.W.2d 791, 796-97 (Tex. 1992) (“In
authorizing a receivership court to enter an injunction barring suits from being brought or
maintained elsewhere, the Legislature recognized the benefit, if not the practical
necessity, of requiring that all claims against the insolvent insurer‟s estate be adjudicated
in the receivership proceedings to ensure the fair and consistent treatment of all claims.”).
15
Munich Am. Reins. Co. v. Crawford, 141 F.3d 585, 593 (5th Cir. 1998); see Lac
D’Amiante, 864 F.2d at 1046 (citing value of having state courts provide binding and
consistent interpretations of state law through insurance liquidation proceedings).

30
rehabilitation or equitable distribution to creditors upon liquidation.” Berg, supra, at

1378-79.

C. Factors To Be Considered When Deciding Whether To Lift An Anti-Suit
Injunction

Given the statutory structure of the Uniform Act, its fundamental goal of

centralizing delinquency proceedings under the control of the chief insurance regulator in

the domiciliary jurisdiction, and the role of anti-suit injunctions in serving that public

policy, a strong presumption exists that an existing anti-suit injunction should not be

lifted to permit a claimant to litigate against the insolvent insurer in a foreign jurisdiction.

That does not mean that it should never happen. As the Manhattan Re decision

recognized, there may be rare circumstances when the lifting of an anti-suit injunction

“would not be inconsistent with the statute or its goal[s].” 2011 WL 4553582, at *5.

As noted, there is a dearth of case law addressing when a court overseeing a

liquidation proceeding under the Uniform Act should lift an anti-suit injunction. In an

effort to draw guidance from a similar legal setting, this decision looks to rulings on

applications by general creditors to lift the automatic stay imposed by the Bankruptcy

Code. See generally 2 Michael Bacchus & Howard J. Steinberg, Bankruptcy Litigation §

12:66 (2015); Robert E. Ginsberg et al., Ginsberg & Martin on Bankruptcy § 3.05 (2016).

Under Section 362(a)(1) of the Bankruptcy Code, the filing of a bankruptcy

petition “operates as a stay, applicable to all entities, of . . . the commencement or

continuation . . . of a judicial, administrative or other action of proceeding against the

debtor.” 11 U.S.C. § 362(a)(1). “The purpose of the automatic stay is to „prevent certain

31
creditors from gaining preference for their claims against the debtor; to forestall the

depletion of the debtor‟s assets due to legal costs in defending proceedings against it;

and, in general, to avoid interference with the orderly liquidation or rehabilitation of the

debtor.‟” In re Scarborough-St. James Corp., 535 B.R. 60, 68 (Bankr. D. Del. 2015)

(quoting St. Croix Condo. Owners v. St. Croix Hotel, 682 F.2d 446, 448 (3d Cir. 1982)).

Those purposes parallel the reasons for issuing anti-suit injunctions under the Uniform

Act.16

Once the automatic stay has gone into effect, the bankruptcy court can lift it for

“cause.” 11 U.S.C. § 362(d)(1). The Bankruptcy Code does not define “cause,” nor does

it provide factors for the court to consider. Ginsberg, supra, § 3.05[B]. “Cause is an

intentionally broad and flexible concept, and is determined on a case-by-case basis.” Id. §

3.05[B][4]. Frequent applications to lift the automatic stay have generated a substantial

body of jurisprudence that addresses that discretionary decision. See In re Brown, 311

B.R. 409, 412 (E.D. Pa. 2004) (“[T]here are a multitude of reported decisions discussing

relief from the stay for „cause,‟ all of which are fact intensive and generally offer no

precise standards . . . .”).

16
See Manhattan, 2011 WL 4553582, at *3 (discussing the substantially similar
purposes of the two mechanisms); Checker Motors, 1992 WL 29806, at *3 n.2 (same);
accord Idaho Tr. Bank v. BancInsure, Inc., 2014 WL 4064063, at *6 (D. Idaho Aug. 15,
2014) (“The [Uniform Act] permits, and even anticipates, that all other proceedings in the
nature of claims against the company will be stayed, and resolved instead in the
liquidation process . . . . Such circumstances are, in fact, directly analogous to bankruptcy
cases . . . .”). See generally Berg, supra, at 1386 (observing that the anti-suit injunction
contemplated by the Uniform Act is “a right that aims at achieving the advantage
provided by the Federal Bankruptcy Code‟s automatic stay and exclusive jurisdiction
provisions”).

32
 One common approach is for the court to weigh twelve factors first identified in In

re Curtis, 40 B.R. 795 (Bankr. D. Utah 1984), and known colloquially as the “Curtis

factors.” They are:

(1) Whether the relief will result in a partial or complete resolution of
the issues.

(2) The lack of any connection with or interference with the bankruptcy
case.

(3) Whether the foreign proceeding involves the debtor as a fiduciary.

(4) Whether a specialized tribunal has been established to hear the
particular cause of action and that tribunal has the expertise to hear
such cases.

(5) Whether the debtor‟s insurance carrier has assumed full financial
responsibility for defending the litigation.

(6) Whether the action essentially involves third parties, and the debtor
functions only as a bailee or conduit for the goods or proceeds in
question.

(7) Whether litigation in another forum would prejudice the interests of
other creditors, the creditors‟ committee and other interested parties.

(8) Whether the judgment claim arising from the foreign action is
subject to equitable subordination under Section 510(c).

(9) Whether movant‟s success in the foreign proceeding would result in
a judicial lien avoidable by the debtor under Section 522(f).

(10) The interest of judicial economy and the expeditious and economical
determination of litigation for the parties.

(11) Whether the foreign proceedings have progressed to the point where
the parties are prepared for trial.

(12) The impact of the stay on the parties and the “balance of hurt.”

Id. at 799-800 (internal citations omitted).

33
 Many decisions have applied the Curtis factors or cited them with approval. See 2

Baccus & Steinberg, supra, § 12:66 (collecting cases). Not all bankruptcy courts follow

them. The Delaware bankruptcy courts, for example, apply a three-pronged balancing test

that asks:

(1) Whether any great prejudice to either the bankruptcy estate or the
debtor will result from the continuation of the civil suit;

(2) Whether the hardship to the non-bankruptcy party by maintenance of
the stay considerably outweighs the hardship to the debtor; and

(3) Whether the creditor has a probability of prevailing on the merits.

Scarborough-St. James, 535 B.R. at 68. Decisions applying this more general framework

nevertheless appear to take into account many of the same considerations identified by

the Curtis factors. See, e.g., In re SCO Gp., Inc., 395 B.R. 852, 857 (Bank. D. Del. 2007)

(incorporating Curtis factors as part of balancing process; drawing Curtis factors from In

re Sonnax Indus. Inc., 907 F.2d 1280 (2d Cir. 1990), which adopted them). See generally

Ginsberg, supra, § 3.05 (collecting cases).

Any potential doctrinal transplant must be approached with caution, and the

analogy to the automatic stay is not exact. One distinction that might be relevant in a

different case is that the automatic stay in bankruptcy is indeed automatic, while the

issuance of an anti-suit injunction under the Uniform Act is discretionary. As the

Commissioner correctly observes, the discretionary stay under the Uniform Act was

modeled on the Bankruptcy Act, which pre-dated the Bankruptcy Code and which did not

incorporate an automatic stay. The automatic stay arrived later, in 1973, “with the advent

34
of the Bankruptcy Rules of Procedure” that foreshadowed the Bankruptcy Code. Baum v.

Anderson, 541 F.2d 1166, 1169 (5th Cir. 1976).

The Commissioner contends that this difference cautions against relying too

heavily on precedent interpreting the automatic stay. One might posit that when a stay is

imposed automatically, there would be a greater risk that it would sweep too broadly. In

response, courts might be more willing to lift an automatic stay. The Bankruptcy Code in

fact provides as a general rule that if a party in interest requests relief from the automatic

stay, then the stay will terminate thirty days after the request “unless the court, after

notice and a hearing, orders such stay continued in effect.” 11 U.S.C. § 362(e)(1). By

contrast, when an anti-suit injunction is issued as a matter of discretion, one might expect

more tailored rulings, and courts therefore might be less willing to revisit their prior

decisions. While theoretically plausible, that distinction is not present here, where the

Anti-Suit Injunction was entered as a broad prophylactic measure analogous to the

automatic stay. The question now is whether to modify that prophylactic measure, not

whether to revisit a prior decision that granted a targeted anti-suit injunction. This case

therefore involves a scenario more closely paralleling an application for relief from the

automatic stay, and the bankruptcy courts‟ extensive experience with those applications

offers a source of insight.

But there is a more important consideration which in my view does apply to this

case, namely that a delinquency proceeding under the Uniform Act is a more specialized

type of proceeding than a bankruptcy under federal law and has a stronger regulatory

overlay. As the discussion of the Uniform Act demonstrates, an insurance liquidation

35
proceeding under state law represents the culmination of the regulation of its business by

the chief regulator of the domiciliary state, effectuated (to borrow a religious analogy

coined by Justice Jack B. Jacobs) through the regulator‟s administration of last rites to the

regulated entity. See Jack B. Jacobs, Delaware Receivers and Trustees: Unsung Ministers

of Corporate Last Rites, 7 Del. J. Corp. L. 251 (1982). Unlike a federal bankruptcy

proceeding, which is available to non-regulated biological and non-biological persons of

all stripes, a delinquency proceeding under the Uniform Act has purposes, substantive

standards, and procedural mechanisms that are tailored to the insurance context. It was

the greater specialization of state insurance liquidation proceedings that provided the

original, pre-McCarran-Ferguson Act policy rationale for excluding insurance company

liquidations from the scope of federal bankruptcy law:

The affairs of an embarrassed or insolvent insurance company often require
much technical skill and judgment and time for their adjustment and a
carrying forward of the business, to prevent lapses and to permit
reinsurance to simplify them. And considering the variety of insurance
obligations assumed and the various statuses thereof, a chief practical
difficulty is the ascertainment of who are really to be considered creditors
and in what amounts, often requiring much time and elaborate accounting
for its solution. Under such circumstances even the election of a trustee in
bankruptcy could be difficult, and a creditors‟ meeting could hardly
prosecute any business, owing to conflicting interests of the various classes
of claims.

In re Supreme Lodge of the Masons Annuity, 286 F. 180, 184-85 (N.D. Ga. 1923). Any

effort to gain insights form the bankruptcy arena must remain sensitive to those

differences. This decision therefore does not adopt any bankruptcy precedent wholesale,

but treats those precedents as informative.

36
D. The Allocation Of The Burden And The Factors That This Decision Will
Consider

In my view, as the party seeking to litigate against the insolvent insurer outside of

the delinquency proceeding, the Bank bears the burden of demonstrating that lifting the

Anti-Suit Injunction “would not be inconsistent with the [Uniform Act] or its goal[s].”

Manhattan Re, 2011 WL 4553582, at *5. Because of the strong policy of centralization

manifested in the Uniform Act, the burden of persuasion is a heavy one, with any doubts

resolved against permitting the party to litigate elsewhere. Placing the burden of

persuasion on the party seeking to lift the Anti-Suit Injunction comports with the general

approach taken to interpreting regulatory statutes in the insurance context:

The state has an important and vital interest in the liquidation of an
insolvent insurance company. The only restriction on the exercise of this
power is that the state‟s action shall be reasonably related to the public
interest and shall not be arbitrary or improperly discriminatory. Because the
insurance business is affected with a public interest, the law relating to
liquidation and dissolution of insolvent domestic companies is liberally
construed in favor of policyholders, creditors, and the public.

1 Couch on Insurance § 5:35 (footnotes omitted).

In considering whether to lift the Anti-Suit Injunction to enable the Bank to sue

Freestone in the South Carolina Action, this decision weighs the following factors:

(1) The nature and extent of any connection between the foreign
litigation and the domestic liquidation proceeding, including

a. Whether the foreign litigation involves the insolvent domestic
insurer holding property in a custodial or fiduciary capacity,
or as a bailee or conduit for the goods or proceeds in question,
or

b. Whether the insolvent domestic insurer itself has insurance
coverage that will cover the foreign litigation and whether the

37
 carrier has assumed full financial responsibility for the
foreign litigation.

(2) The interests of judicial efficiency and litigant economy, including

a. Whether the foreign litigation can decide the issue more
efficiently and expeditiously than the domestic liquidation
proceeding;

b. Whether a specialized tribunal has been established to hear
the particular cause of action and that tribunal has the
expertise to hear such cases;

c. How far the foreign litigation has progressed, and

d. Whether the foreign litigation will completely resolve the
issue.

(3) Whether the foreign litigation would prejudice the interests of the
Commissioner, other claimants, or other interested parties, including

a. Whether the foreign litigation is likely to result in a judgment
that will give rise to a claim entitled to a recovery in the
domestic liquidation proceeding given its priority under the
Uniform Act;

b. The amount of the likely payment relative to the burden on
the insolvent domestic insurer, and

c. Whether the claim that would result from the foreign
judgment would be subject to equitable subordination or other
doctrines.

(4) The balance of hardships and whether the party wishing to proceed
with foreign litigation has shown that the hardship it would suffer
from not being able to proceed considerably outweighs the hardship
to the Commissioner and the insolvent domestic insurer.

As with other multi-factor tests, these factors are not intended to establish an exclusive or

exhaustive list of considerations.17 Additional factors may be relevant in future cases, and

17
Cf., e.g., Bell Helicopter Textron, Inc. v. Arteaga, 113 A.3d 1045, 1051-60 (Del.

38
the common law process may demonstrate that some of the enumerated factors prove

unhelpful and warrant little to no weight. The balancing is not a mathematical exercise.

1. The Nature And Extent Of Any Connection Between The
Foreign Litigation And The Domestic Liquidation Proceeding

The first factor that this decision applies is the nature and extent of any connection

between the foreign litigation and the domestic liquidation proceeding, together with the

risk that the foreign proceeding could interfere with the liquidation proceeding. This

factor draws by analogy on the second Curtis factor, which is “[t]he lack of any

connection with or interference with the bankruptcy case.” 40 B.R. at 800. As the Curtis

court noted, “[e]ven slight interference with the administration may be enough to

preclude relief in the absence of a commensurate benefit.” Id. at 806; see In re Penn-

Dixie Indus., Inc., 6 B.R. 832, 836 (Bankr. S.D.N.Y. 1980).

The closer the connection is between the foreign litigation and the domestic

liquidation proceeding, the greater the likelihood of interference. If the foreign litigation

relates to a core function of the receivership, such as marshaling assets or assessing

2015) (balancing non-exclusive list of factors to be considered when determining choice
of law under the Restatement (Second) of Conflict of Laws (1971)); Martinez v. E.I.
DuPont de Nemours & Co., 86 A.3d 1102, 1104-05 (Del. 2014) (identifying non-
exclusive list of factors to be considered when conducting forum non conveniens
analysis); Tumlinson v. Advanced Micro Devices, Inc., 81 A.3d 1264, 1269 (Del. 2013)
(identifying a “non-exhaustive list of factors” that a trial court may consider when
evaluating the reliability of expert testimony under Daubert v. Merrill-Dow
Pharmaceuticals, Inc., 509 U.S. 579 (1993)); In re Poliquin, 49 A.3d 1115, 1134 (Del.
2012) (identifying a “non-exhaustive lift of aggravating factors” that may be considered
when imposing attorney discipline); Sugarland Indus., Inc. v. Thomas, 420 A.2d 142, 150
(Del. 1980) (identifying non-exhaustive list of multiple factors to be considered when
awarding attorney‟s fees under common fund and common benefit doctrines).

39
claims, then this factor counsels against relief from an anti-suit injunction. Even the

prospect of forcing the Commissioner to expend time and resources litigating elsewhere

may be sufficient to cause this factor to weigh against relief, because a central purpose of

the Uniform Act is “to avoid dissipating a distressed insurer‟s assets by allowing it to be

sued, and requiring it to defend, litigations scattered in many jurisdictions throughout the

country.”18

By contrast, a situation where this factor could support relief from an anti-suit

injunction might involve a suit against the insolvent insurer that did not actually seek to

18
Manhattan Re, 2011 WL 4553582, at *3 (quoting Checker Motors, 1992 WL
29806, at *3); accord Cohen 89 A.3d at 81 n.73; see Munich Am., 141 F.3d at 593
(ordering federal court to abstain from hearing claim in deference to insurance
proceeding; observing that “[i]n addition to the interests served by orderly adjudication of
claims . . . , consolidation presents the unnecessary and wasteful dissipation of the
insolvent company‟s funds that would occur if the receiver had to defend unconnected
suits in different forms across the country”); Lac D’Amiante, 864 F.2d at 1046 (directing
federal court to abstain from hearing insurance issue; describing role of insurance
regulator as liquidator and explaining that “independent proceedings against an insurer
placed into insolvency are highly disruptive to the state‟s regulatory scheme”).

The weight given to the risk that foreign litigation will dissipate the insurer‟s
resources and divert the attention of the regulator marks one area where the public
policies underlying the Uniform Act suggest a different answer than the Bankruptcy
Code. Under the former regime, these costs are a significant concern. Under the latter,
they are frequently discounted. See, e.g., In re Santa Clara Cty. Fair Ass’n, 180 B.R. 564,
566 (B.A.P. 9th Cir. 1995) (“Ordinarily, litigation costs to a bankruptcy estate do not
compel a court to deny stay relief.”); In re Burger Boys, Inc., 183 B.R. 682, 688
(S.D.N.Y. 1994) (“Courts have held, however, that the increased costs of litigating in a
particular forum are not so prejudicial as to require continuance of a stay.”); In re Roger,
539 B.R. 837, 848 (C.D. Cal. 2015) (reversing denial of stay relief in part because “the
record does not contain any documentary evidence concerning projections regarding the
comparative attorneys‟ fees and expenses that would be amassed by litigating in the
different fora”).

40
establish a claim against the insurer, but which instead sought to secure property or assets

that the insurer was holding in a custodial or fiduciary capacity. This example draws by

analogy on the third Curtis factor, which envisions a situation where the debtor is merely

holding property as a fiduciary,19 and the sixth Curtis factor, which identifies an action

19
The actual language of the third Curtis factor is “[w]hether the foreign
proceeding involves the debtor as a fiduciary.” Curtis, 40 B.R. at 800. This court
frequently hears litigation involving claims for breach of fiduciary duty, which are often
highly complex and heavily litigated proceedings. At first blush, the third Curtis factor
seems to envision deferring to a foreign court to oversee this type of litigation. Closer
examination of the Curtis decision and the case that it cited in support of this factor, In re
Bailey, 11 B.R. 199, 201 (Bankr. E.D. Va. 1981), reveals that both relied on the
legislative history of Section 362, which mentioned fiduciary status as part of a broader
discussion of instances in which the debtor did not hold the property in its own name but
rather for others:

The lack of adequate protection of an interest in property of the party
requesting relief from the stay is one cause for relief, but is not the only
cause. . . . Other causes might include the lack of any connection with or
interference with the pending bankruptcy case. For example, a divorce or
child custody proceeding involving the debtor may bear no relation to the
bankruptcy case. In that case, it should not be stayed. A probate proceeding
in which the debtor is the executor or administrator of another‟s estate
usually will not be related to the bankruptcy case, and should not be stayed.
Generally, proceedings in which the debtor is a fiduciary, or involving
postpetition activities of the debtor, need not be stayed because they bear
no relationship to the purpose of the automatic stay, which is debtor
protection from his creditors. The facts of each request will determine
whether relief is appropriate under the circumstances.

H.R. Rep. No. 95–595, 95th Cong., 1st Sess. 343-44 (1977), quoted in Curtis, 40 B.R. at
799. The reference to the “debtor as a fiduciary” is thus not a reference to a claim against
the debtor for breach of fiduciary duty, but rather to a situation where the debtor has
nominal legal title but not equitable title. By contrast, a claim for breach of fiduciary
duty, if proven, generates a judgment against the debtor, and hence such a claim does
involve the “purpose of the automatic stay, which is debtor protection from his creditors.”
Id.; see Pink v. Title Guar. & Tr. Co., 8 N.E.2d 321, 324-25 (N.Y. 1937) (requiring
parties asserting counterclaims for breach of fiduciary duty to pursue them through

41
that “essentially involves third parties” in which “the debtor functions only as a bailee or

conduit for the goods or proceeds in question.” 40 B.R. at 800. In these scenarios, the

foreign litigation should not require meaningful expenditures of resources by the receiver,

nor would the foreign litigation result in a judgment against the insurer.

Other situations that could lead to this factor supporting relief from the anti-suit

injunction would include cases where the insolvent insurer is not itself at risk, such as

where the insurer itself had insurance coverage that will cover the foreign litigation and

the carrier has agreed to assume full financial responsibility for the foreign litigation.

This example draws by analogy on the fifth Curtis factor, which envisions a situation

where “the debtor‟s insurance carrier has assumed full financial responsibility for

defending the litigation.”20

In this case, the claims that the Bank wishes to assert in the South Carolina Action

relate directly to the insurance liquidation proceeding. The Bank has filed claims notices

as part of the Claims Process, thereby recognizing that if its claims are not litigated in the

claims process in insurance company liquidation proceeding).
20
40 B.R. at 800; see Webster v. Superior Court, 758 P.2d 596, 597 (Cal. 1988)
(holding that claimant injured in shooting rampage in offices of insolvent insurer should
have been permitted to pursue personal injury claim outside of liquidation process where
insurer had liability insurance that would cover any claim plus the expenses of defending
it and where claimants stipulated that they would not seek any recovery from the
insolvent insurer‟s assets). See generally Ginsberg, supra, § 3.05[B][4][a] (“Where the
debtor is a defendant in an action where any judgment will be covered by insurance (most
commonly a personal injury suit), the plaintiff should be granted relief to pursue the
action. This is because the claim, if proved valid at trial, will be satisfied, not from
property of the estate or from property of the debtor, but by the insurance company.”).

42
South Carolina Action, they will be handled as part of the insurance liquidation

proceeding. Requiring the Commissioner to defend the South Carolina Action will force

the Commissioner to divert a portion of Freestone‟s limited resources to litigation

defense, thereby dissipating Freestone‟s assets. The Commissioner also will be forced to

devote attention to the South Carolina Action, diverting the Commissioner from her core

tasks of managing Freestone‟s business, marshaling its assets, and overseeing the Claims

Process. This is not a case in which the Bank seeks to obtain property that Freestone was

merely holding in a custodial or fiduciary capacity, nor is there an alternative source of

funds that would cover the Commissioner‟s legal expenses or any judgment, such as

insurance proceeds. This factor weighs heavily against lifting the Anti-Suit Injunction.

2. The Interests Of Judicial Efficiency And Litigant Economy

The second factor this decision considers incorporates the interests of judicial

efficiency and litigant economy. As long as considerations of fundamental fairness and

due process are satisfied, the legal system has an obvious interest in resolving disputes in

an expeditious and economical manner, both for the parties involved and for the legal

system as a whole. This factor adheres closely to the tenth Curtis factor, which calls for

considering “[t]he interest of judicial economy and the expeditious and economical

determination of litigation for the parties.” 40 B.R. at 800.

Pertinent considerations under this heading include whether the foreign litigation

will proceed in a specialized tribunal that has been established to hear the particular cause

of action, how far the foreign litigation has progressed, and whether the foreign litigation

will completely resolve the claims and avoid any need for them to be addressed in the

43
insurance proceeding. These considerations draw on the first, fourth, and eleventh Curtis

factors, which are

(1) Whether the relief will result in a partial or complete resolution of
the issues[;]

....

(4) Whether a specialized tribunal has been established to hear the
particular cause of action and that tribunal has the expertise to hear
such cases[;]

. . . . [and]

(11) Whether the foreign proceedings have progressed to the point where
the parties are prepared for trial.

Id. at 799, 800.

When applied to a delinquency proceeding under the Uniform Act, this factor and

its subsidiary considerations reinforce the presumption against lifting the Anti-Suit

Injunction that is manifested by placing the burden of persuasion on the party seeking to

litigate elsewhere. The Uniform Act already seeks to achieve the goals of judicial

efficiency and litigant economy by centralizing the liquidation process in a single

jurisdiction. Moreover, the statutory liquidation proceeding is itself a specialized

proceeding, overseen by the domiciliary court, in which the chief insurance regulator of

the domiciliary state takes charge of the insurer‟s affairs, marshals its assets, and

manages the Claims Process. The Claims Process itself serves as an additional form of

specialized proceeding that permits classes of claims against an insolvent insurer to be

resolved expeditiously, particularly when those categories of claims will not be entitled to

any distribution under the statutory priority scheme. See 1 Couch on Insurance § 6:7

44
(describing claims resolution process); Francine L. Semaya & William K. Broudy, A

Primer on Insurance Receiverships, 40 The Brief 22, 29-30 (2010) (same). Numerous

courts have recognized the value of the specialization of the state-law insurance

liquidation process and the expertise of the state insurance regulators in carrying it out.21

In this case, there are no countervailing factors that would favor permitting the

Bank to litigate against Freestone in the South Carolina Action. The South Carolina Court

21
See, e.g., Lac D’Amiante, 864 F.2d at 1045 (deferring to state insurance
liquidation proceeding in light of role of states as “preeminent regulators of insurance in
the federal system” and the structure of the state-law regulatory system); Grimes v.
Crown Life Ins. Co., 857 F.2d 699, 705 (10th Cir. 1988) (deferring to state insurance
delinquency proceeding in light of the state‟s “complex and comprehensive scheme of
insurance regulation which contains the [Uniform Act] for the liquidation of an insolvent
insurer”); Law Enf’t Ins. Co. v. Corcoran, 807 F.2d 38, 44 (2d Cir. 1986) (deferring to
state insurance liquidation proceeding given “the state‟s strong interest in centralizing
claims against an insolvent insurer into a single forum where they can be efficiently and
consistently disposed of”); Levy v. Lewis, 635 F.2d 960, 963 (2d Cir. 1980) (“The
Superintendent of Insurance is an experienced state official who has been involved both
in rehabilitating and liquidating [the insolvent insurer]. Liquidation in particular is an
area in which the Superintendent‟s expertise is critical. Liquidation proceedings involve
the adjustment of thousands of claims against the insurer by policyholders and those who
claim under them, as well as claims by present employees, past employees, and general
creditors. Moreover, the claims must be satisfied by marshalling the existing assets of the
insolvent company and by reinsuring existing policies using a state fund established for
this purpose.”); Blackhawk Heating & Plumbing Co. v. Geeslin, 530 F.2d 154, 159-60
(7th Cir. 1976) (explaining that the “[t]he interests of [a domestic insurance company and
its] owners policyholders, and creditors, as well as the public, are best served and
protected by an orderly and efficient process of liquidation” in state court); Motlow v. S.
Hldg. & Sec. Corp., 95 F.2d 721, 724, 725-26 (8th Cir. 1938) (describing New York
system for insolvency proceedings involving domestic insurers as “comprehensive,
economical, and efficient”; rejecting attempt by creditor to assert claim belonging to
insolvent insurer in federal court, outside of liquidation proceedings; explaining that
“other courts, except when called upon by the court of primary jurisdiction for assistance,
are excluded from participation [in liquidation proceedings” and that “[t]his should be
particularly true as to proceedings for the liquidation of insolvent insurance companies”),
cert. denied, 305 U.S. 609 (1938).

45
is certainly a distinguished and qualified court, and there is no question that it can

capably address any claims that the Bank wishes to bring against Freestone. But the

South Carolina Action is a plenary proceeding, not a specialized proceeding, and the

South Carolina Court is not a specialized tribunal.

This is also not a situation where the South Carolina Action is on the verge of trial

such that it might make sense to defer to the outcome of that litigation. The South

Carolina Action remains at an early stage. The South Carolina Court has denied the

Bank‟s motion to dismiss Companion‟s claims, but that is all. The Bank‟s claims against

Freestone have yet to be asserted. Nor would the outcome of the South Carolina Action

resolve completely the issues surrounding the Bank‟s claims against Freestone. The most

that can be said is that if this court lifts the Anti-Suit Injunction, then any decision by the

South Carolina Court would be binding on the Commissioner and this court for purposes

of establishing Freestone‟s liability and the facial amount of its claim. That is true

generally under principles of collateral estoppel, see Pyott v. La. Mun. Police Emps.’ Ret.

Sys., 74 A.3d 612, 616 (Del. 2013), and by analogy to how the Uniform Act handles

secured claims and claims against statutory deposits held by non-residents who elect to

proceed in ancillary proceedings rather than in the domiciliary proceeding.22 The decision

22
See 18 Del. C. §§ 5915 & 5916. As discussed previously, when delinquency
proceedings have been commenced in one state against an insurer domiciled in that state,
and when the scope of the insurer‟s operations warrants the insurance regulator in another
state commencing ancillary proceedings in that state that result in the insurance regulator
in the sister state serving as an ancillary receiver, then residents of the ancillary state can
present a claim to the ancillary receiver. The final allowance as determined in the
ancillary proceedings is “conclusive as to its amount” and “shall also be accepted as

46
would not be binding for purposes of determining the priority of the resulting claim or the

amount of any distribution from Freestone that the Bank might receive. The Bank

recognizes this point by accepting that it could not execute on any judgment that it might

obtain through the South Carolina Action but would have to return to this court and

participate in the liquidation process.

The Bank has suggested that this court should defer to the South Carolina Action

because the Trust Agreement contains a forum selection provision that identifies the

South Carolina Court as a permissible forum where Freestone can be sued. The forum

selection provision is only mandatory for claims that Freestone might assert; it is

permissive as to claims brought by the Bank or Companion. As among the parties to the

Trust Agreement, therefore, the provision does not require that the Bank sue in the South

Carolina Court. Regardless, in my view, even a mandatory forum selection provision

would not automatically bind the Commissioner when exercising the State of Delaware‟s

regulatory and police powers under the Uniform Act. It is true, generally speaking, that

the Commissioner stands in the shoes of the insolvent entity when it acts as receiver, but

that general principle has limitations, and it does not allow private parties to trump the

statutory provisions and public policies of the domiciliary state, such as the public policy

of centralizing proceedings in the domiciliary jurisdiction and the statutory provisions

conclusive as to its priority, if any, against special deposits or other security located
within this State.” Id. § 5916(b)(2). The concept of ancillary proceedings as used by the
Uniform Act does not encompass any plenary lawsuit that a creditor chooses to file in
another state, or any counterclaim or third-party claim that the creditor chooses to assert
in pending litigation in another state.

47
that implement that policy. The Manhattan Re decision reached the same conclusion

implicitly when it determined that it had discretion to determine whether the parties in

that case would have their dispute heard in arbitration, notwithstanding that the

arbitration provision would have been mandatory if the Commissioner had not taken over

as receiver for the insurer in the context of a receivership proceeding. 2011 WL 4553582,

at *7. That does not mean that a mandatory forum selection provision would not be taken

into account, only that it is not itself dispositive. Because the forum selection provision in

this case was not mandatory, this decision need not dilate further on the issue.

Under the circumstances, the second factor does not favor lifting the Anti-Suit

Injunction. The Claims Process, not the South Carolina Action, provides the more

specialized, efficient, and cost-effective method of completely addressing the Bank‟s

claims against Freestone.

3. Prejudice To The Interests Of The Commissioner, Other
Claimants, And Other Interested Parties

The third factor that this decision considers is whether permitting a claimant to

proceed with the foreign litigation would prejudice the interests of the Commissioner,

other claimants, and other interested parties. This factor draws on the seventh Curtis

factor, which is “[w]hether litigation in another forum would prejudice the interests of

other creditors, the creditors‟ committee and other interested parties.” 40 B.R. at 800.

Pertinent considerations under this heading include (i) whether the foreign

litigation is likely to result in a judgment that would be entitled to a distribution in the

liquidation proceeding, (ii) the amount of the likely payment relative to the burden on the

48
insolvent domestic insurer, and (iii) whether the claim that would result from the foreign

judgment would be subject to equitable subordination or other doctrines. These

considerations draw on the eighth and ninth Curtis factors, which take into account the

priority of the eventual claim in the bankruptcy proceeding and the claimant‟s ability to

recover. The eighth factor does so by considering “[w]hether the judgment claim arising

from the foreign action is subject to equitable subordination under Section 510(c).”23 The

ninth factor does so by considering “[w]hether movant‟s success in the foreign

proceeding would result in a judicial lien avoidable by the debtor under Section 522(f).”24

23
40 B.R. at 800. Section 510(c) of the Bankruptcy Code “adopts the long-
standing judicially developed doctrine of equitable subordination under which a
bankruptcy court has power to subordinate claims against the debtor‟s estate to claims it
finds ethically superior under the circumstances.” Allied E. States Maint. Corp. v. Miller
(In re Lemco Gypsum, Inc.), 911 F.2d 1553, 1556 (11th Cir. 1990). Section 510(c)
provides:

(c) Notwithstanding subsections (a) and (b) of this section, after notice and
a hearing, the court may--

(1) under principles of equitable subordination, subordinate for
purposes of distribution all or part of an allowed claim to all or part
of another allowed claim or all or part of an allowed interest to all or
part of another allowed interest; or

(2) order that any lien securing such a subordinated claim be
transferred to the estate.

11 U.S.C § 510(c). A subordinated claimant may recover little or nothing at all. It would
make little sense to expend litigant and judicial resources to pursue, dispute, or adjudicate
the claim, and therefore the prospect that a claim will be subordinated counsels against
lifting the stay. See, e.g., In re CLC of Am., Inc., 68 B.R. 512, 515 (Bankr. E.D. Mo.
1986) (declining to provide stay relief where claim would be subordinated to the claims
of general creditors and would recover, if at all, only with equity holders).
24
40 B.R. at 800. In a bankruptcy proceeding, the debtor‟s assets become property

49
 In the context of an insurer‟s insolvency proceeding under the Uniform Act,

obtaining a judgment against the insurer in foreign litigation does not automatically lead

to recovery. The claim still must be assigned a priority by the Commissioner, subject to

the approval of the Commissioner‟s recommendation by the Court of Chancery. See 18

Del. C. § 5918. As previously discussed, Class III encompasses claims by “policyholders,

beneficiaries, and insureds.” Class VI encompasses claims by general creditors. In

addition, claims by general creditors that remained contingent as of the bar date are not

entitled to any recovery, absent a surplus. Id. § 5928(a). Under this priority scheme,

general creditors in an insurance liquidation frequently do not receive any distributions.

The prioritization scheme matters because if a claim is not likely to receive any

distribution, it makes little sense to permit the claimant to pursue the claim in another

jurisdiction and force the Commissioner to devote a portion of the insolvent insurer‟s

scarce resources to defending the claim.

of the bankruptcy estate, subject to the debtor‟s right to reclaim certain property as
exempt. Schwab v. Reilly, 560 U.S. 770, 774 (2010). Section 522 of the Bankruptcy Code
specifies the types of property that is eligible for exemption. Section 522(f) provides that

the debtor may avoid the fixing of a lien on an interest of the debtor in
property to the extent that such lien impairs an exemption to which the
debtor would have been entitled under subsection (b) of this section, if such
lien is . . . a judicial lien, other than [a lien involving domestic support
obligations] . . . .

11 U.S.C. § 522(f)(1)(A). If the litigation for which stay relief is sought would result in a
lien on exempt property, and if the debtor could avoid the lien by invoking the
exemption, then “no purpose is served in granting relief from the automatic stay” to allow
the litigation to proceed. Builders & Remodelers, Inc. v. Hanson, 20 B.R. 440, 442
(Bankr. D. Minn. 1982).

50
 If the Bank were successful in the South Carolina Action, it would hold a Class VI

claim. Moreover, because the Bank‟s claim remained contingent as of the bar date, the

Bank only would be able to receive a distribution if “[t]here is a surplus and the

liquidation is thereafter conducted upon the basis that such insurer is solvent.” Id. That is

highly unlikely. Lifting the Anti-Suit Injunction would force the Commissioner to re-

purpose scarce resources that otherwise could fund distributions to policyholders and

other higher priority claimants and use them to pay for litigation counsel in the South

Carolina Action, with the odds-on outcome being that even if the Bank prevailed, it

would recover nothing. The third factor therefore weighs heavily in favor of denying the

Bank‟s motion.

4. The Balance Of Hardships

The fourth factor that this decision considers is the balance of hardships. This

factor draws on the twelfth Curtis factor, which considers “[t]he impact of the stay on the

parties and the „balance of hurt.‟” 40 B.R. at 800. The analysis of the preceding factors

foreshadows the outcome of this one.

From the Commissioner‟s perspective, being forced to participate in the South

Carolina Action yields no benefits, only costs. The South Carolina Action is a plenary,

non-specialized proceeding that will not resolve the Bank‟s claims more efficiently than

the Claims Process. Meanwhile, the Commissioner will be distracted from its statutorily

identified tasks of managing Freestone‟s operations, marshaling its assets, and evaluating

and making recommendations regarding claims. The Commissioner also will have to

51
devote resources to the South Carolina Action that otherwise could be used to pay in-the-

money claims.

From the Bank‟s perspective, bringing Freestone into the South Carolina Action

yields at best intangible benefits. The Bank‟s prospects of an eventual monetary recovery

from Freestone are not heightened; they remain non-existent unless Freestone turns out to

have a surplus. The best the Bank can do is contend that without Freestone in the South

Carolina Action, the South Carolina Court will not be able to allocate a share of liability

to Freestone, which could increase the Bank‟s relative share of liability. But that

argument does not withstand scrutiny. To the extent that the Bank can be held jointly and

severally liable in the South Carolina Action, as appears to be the case if Companion

prevails, then Companion can recover 100% of its losses from the Bank. Whether

Freestone is a party to the South Carolina Action does not affect that prospect; it is a

function of the doctrine of joint and several liability. If Freestone were solvent, the Bank

might be able to shift some of that liability to Freestone through indemnification or

contribution, and Freestone‟s degree of responsibility might affect the contribution

analysis, but Freestone‟s insolvency renders that prospect trivial. Even if Freestone were

allocated 100% of the liability, the Bank would not be able to recover anything from

Freestone (unless Freestone proves to be solvent), and therefore Freestone‟s share of the

loss will continue to lie with the Bank.

The Bank also argues that whether or not Freestone is in the case may affect the

degree to which liability is allocated among the Bank, Southport, and Burns. As the Bank

sees it, Freestone‟s absence might result in the Bank bearing a greater share of liability.

52
That argument, however, cuts both ways, as the Bank can use the empty chair defense in

an effort to shift blame to Freestone. Moreover, because Freestone is insolvent, the Bank,

Southport, and Burns really will be arguing about how to allocate liability among

themselves. The doctrine of joint and several liability makes them each potentially liable

for the full extent of Companion‟s damages, regardless of what percentage of

responsibility might be allotted to Freestone. The effect of Freestone‟s insolvency is to

remove Freestone from the risk-sharing picture, not to alter the risk-sharing profile as

among the Bank, Southport, and Burns. The Bank therefore will not suffer any

incremental prejudice from not being able to name Freestone as a third-party defendant.

The prejudice the Bank has suffered results from Freestone being insolvent, not the Anti-

Suit Injunction. The balancing of hardships thus favors keeping the Anti-Suit Injunction

in place.

E. The Different Outcome In Manhattan Re

The Bank argues that Manhattan Re requires a different outcome. Although the

Manhattan Re decision did not conduct a factor-based analysis, it provides an example of

a situation when the factors considered by this decision would support lifting an anti-suit

injunction to permit a focused action to proceed in a specialized forum.

The Manhattan Re decision arose out of a delinquency proceeding involving

Manhattan Re-Insurance Company (“Manhattan Re”), an insolvent, Delaware-domiciled

insurer. The Commissioner had filed the delinquency proceedings in 2007. Four years

later, in 2011, the Commissioner had proposed a plain of rehabilitation. American

Motorists Insurance Company (“AMICO”) was the only objector to the plan.

53
 AMICO was the successor in interest to counterparties under various reinsurance

agreements that Manhattan Re entered into during the 1970s. Through the agreements,

Manhattan Re had ceded certain risks to AMICO under policies that Manhattan Re wrote.

To secure its payment obligations, AMICO posted a letter of credit for Manhattan Re‟s

benefit. Manhattan Re was entitled to draw the full amount of the letter of credit if

AMICO failed to maintain the letter of credit or otherwise provide substitute security.

In 2003, AMICO notified Manhattan Re that it would not be able to renew the

letter of credit. Manhattan Re drew down the full balance of the letter of credit in the

amount of $7,392,000 and held the funds in a segregated account to secure AMICO‟s

payment obligations under the reinsurance agreements. The decision called these

amounts the “AMICO Fund.” Once Manhattan Re entered liquidation, the Commissioner

contended that the AMICO Fund belonged to Manhattan Re and constituted a general

asset of the estate. The Commissioner‟s proposed plan of rehabilitation treated the

amounts in the AMICO Fund as unrestricted assets to be used to satisfy Manhattan Re‟s

general obligations to policyholders and creditors, as well as any administrative fees and

expenses incurred by the Commissioner.

AMICO objected, contending that the amounts in the AMICO Fund were

restricted cash collateral that only could be used to pay AMICO‟s obligations as a

reinsurer of Manhattan Re. The underlying reinsurance contracts contained arbitration

clauses, and AMICO asked the court to refer the dispute over the proper characterization

of the AMICO Fund to arbitration.

54
 The Commissioner opposed having the dispute arbitrated. First, the Commissioner

argued that an arbitration clause in a pre-petition agreement is not binding on the chief

insurance regulator in the domiciliary state when performing its regulatory functions in a

delinquency proceeding under the Uniform Act. After considering various authorities, the

Manhattan Re decision held that it had discretion to order that the dispute be resolved by

arbitration. 2011 WL 4553582 at *7. That aspect of Manhattan Re is not implicated here.

Second, the Commissioner contended that even if the court could order arbitration,

there was an existing anti-suit injunction, entered in 2007, that barred the arbitration

proceeding from going forward. As this decision has noted on several occasions, the

court in Manhattan Re held that it had the discretion to lift its injunction if doing so

“would not interfere with the operation of the [Uniform] Act and would further the

interest of an orderly resolution of the rehabilitation of Manhattan Re.” Id. at *8.

On the facts presented, the court in Manhattan Re lifted the anti-suit injunction.

Although the Manhattan Re decision did not conduct a multi-factor analysis, its

reasoning suggests that the court evaluated key considerations that this case has

identified. The different result in Manhattan Re stems from the reality that the factual

record pointed in the opposite direction.

Most prominently, the Manhattan Re court took into account considerations

analogous to the third factor evaluated by this decision, namely whether permitting a

claimant to proceed with the foreign litigation would prejudice the interests of the

Commissioner, other claimants, and other interested parties. The Manhattan Re court

noted the advanced state of the rehabilitation proceeding and the reality that having the

55
status of the AMICO Fund determined by arbitration would not harm any of Manhattan

Re‟s policy holders:

There apparently are only eight remaining policy claims against the assets
of Manhattan Re, and all of those claims will be covered by either AMICO
or the AMICO Fund. Therefore, there is no question that the remaining
policyholders will be protected, regardless of whether the dispute over the
AMICO Fund is resolved through arbitration or litigation in this Court.

Id. Unlike in this case, permitting the arbitration to proceed did not present any risk that

funds would be diverted from higher priority claimants and conflict with the core

purposes of the Uniform Act.

Relatedly, the Manhattan Re decision recognized in substance that having the

status of the AMICO Fund decided through arbitration would not prejudice the

Commissioner. Unlike the Bank‟s claims in this case, the status of the AMICO Fund did

not actually involve a claim against the estate. The question was whether and to what

degree the AMICO Fund was an asset of the estate. AMICO‟s objection therefore was

logically prior to the claims analysis and would have to be decided in any event, either by

the court or someone else. There also was little difference between the two forums

because the question predominantly was one of law under the governing agreements. As

the Manhattan Re court observed, “there is no reasonable basis on which to believe that

either party would suffer material prejudice by having an arbitral panel, rather than this

Court, decide their dispute regarding the nature of the AMICO Fund.” Id.

The Manhattan Re decision likewise appears to have considered the interests of

judicial efficiency and litigant economy. As discussed above, pertinent considerations

under this heading include whether the foreign litigation will proceed in a specialized

56
tribunal that has been established to hear the particular cause of action and whether the

foreign litigation will completely resolve the claims. The Manhattan Re court noted that

the arbitration provisions in the reinsurance agreements called for disputes to be resolved

“before three disinterested executives from the insurance industry.” Id. The arbitration

provisions thus contemplated a sophisticated tribunal with expertise in the specific issue

being presented, giving that forum a comparative advantage even when compared to a

delinquency proceeding under the Uniform Act. Moreover, the outcome of the

proceeding before the arbitration panel would decide completely the status of the AMICO

Fund without any need for further analysis by the court.

The Bank‟s situation is materially different. The Bank wishes to assert fact-laden

and legally complex claims in the South Carolina Action, and the nature of the litigation

will diverge substantially from this court‟s streamlined evaluation of a recommendation

by the Commissioner as to the treatment of a claim that remained contingent on the bar

date and thus will not recover anything unless Freestone proves to have a surplus. The

South Carolina Court is indisputably competent to decide any issue presented to it, but it

is not a specialized tribunal, and it lacks the types of comparative advantages over a

delinquency proceeding that the arbitration panel possessed in Manhattan Re. Equally

important, the South Carolina Action cannot fully resolve the issues presented. Even if

the Bank proceeded to trial in the South Carolina Action and obtained a decision from the

South Carolina Court, that ruling would not end matters. The Bank would have to return

to this court and participate in the Claims Process. There is also the likelihood that if the

Anti-Suit Injunction is not lifted, no one ever will need to determine whether and to what

57
extent Freestone is liable to the Bank. Unlike in Manhattan Re, therefore, lifting the Anti-

Suit Injunction in this case threatens to divert scarce resources from higher priority

claimants, interfere with the activities of the Commissioner, and prejudice the

administration of the receivership.

In light of the differences between the facts in Manhattan Re and the facts in this

case, it should not come as a surprise that the two decisions reach different results. The

Manhattan Re case involved a different type of dispute, a different type of alternative

proceeding, and different implications for the delinquency proceeding before the court.

III. CONCLUSION

On the facts presented, lifting the Anti-Suit Injunction to permit the Bank to

litigate against Freestone in the South Carolina Action would be contrary to the

philosophy, structure, and purpose of the Uniform Act. The Bank‟s motion for relief from

the Anti-Suit Injunction is denied.

58