Mr. Charles Collis, a Justice of the Peace and former Government Senate leader; Mr. William M. Cox, a Government Member of Parliament at the time; Mr.

William de Frith, a Justice of the Peace; Mr. Donald Lines OBE, Justice of the Peace and CEO of the Bank of Bermuda; Dr. John Stubbs, a current Government MP; Mr. Greg Haycock, partner in accounting firm Butterfield & Steinhoff; Mr.

Michael Collier, chief general manager of the Bank of Butterfield; Mr. Richard Spurling, a partner in law firm Appleby, Spurling & Kempe; Mr. Fernance Perry, chairman of Bermuda Broadcasting Company; Front Street retailers Mr. Peter Cooper, Mr. Eldon Trimingham and Mr. David A.J.G. White, and Dr. Charles Dyer and Mr. G. McDonald Smith.

The officers of the company were Mr. Collis, president; Mr. Cox, vice president; and Mr. John Patterson, secretary.

Bermuda Fire & Marine chairman, the Hon. Charles Collis, has attacked US creditors who have accused the company's 1991 directors of stripping it of more than $40 million worth of assets.

In his first interview since Bermuda Fire & Marine went into provisional liquidation last Tuesday, Mr. Collis accused creditors of ignorance over the board's actions.

"They do not appreciate or understand what we have done for them,'' said Mr.

Collis.

And he said he was not unduly concerned by a report over the weekend in Lloyd's List, Britain's biggest-selling insurance newspaper, that the Department of Trade and Industry in the United Kingdom is investigating the company.

"They're barking up the wrong tree,'' said Mr. Collis, adding: "The article says nothing more than they're looking into it.'' On the controversial 1991 deal that led to Bermuda Fire & Marine selling its domestic business, in essence, to itself, he said that "top dollar'' had been paid.

Creditors view the deal as a blatant attempt by shareholders to preserve assets which would otherwise have been available to meet potential future liabilities.

Under the arrangement, a new company controlled by the same people and confusingly called BF&M, paid Bermuda Fire & Marine $56 million for its domestic business.

The purchase price was satisfied by $10 million in cash, a loan note of $3.5 million, one million nine percent convertible cumulative redeemable preference shares in BF&M and 2.88 million common shares in BF&M.

The BF&M common shares were then immediately dividended out to Bermuda Fire & Marine's shareholders.

It was this dividend that has particularly angered creditors.

They argue that, in effect, the bulk of the proceeds from the purchase was not kept in the company to pay liabilities which could reasonably be expected to occur.

They are also concerned that, at a meeting of Bermuda Fire & Marine's preferred shareholders eight days before the sale was completed, a resolution was passed converting their convertible preference shares into redeemable preference shares.

Details of this meeting and its effects were documented in Bermuda Fire & Marine's 1991 annual report.

The effect of the arrangement was that Bermuda Fire & Marine became obligated to buy back these preferred shares for their issue price of $5, whereas before the change the preference shares could only be converted into common stock of Bermuda Fire & Marine.

Five days after the deal went through, all two million preference shares were redeemed for an amount totalling $10 million.

Creditors point out that Bermuda Fire & Marine's common stock collapsed from $4 to 50 cents on the Bermuda Stock Exchange after the sale of its domestic business.

In hindsight, preferred shareholders had benefitted by at least $9 million due to the change in status of their shares, since Bermuda Fire & Marine's common stock never rose above 50 cents after the sale and had dropped to five cents per share prior to its winding-up.

After the sale of Bermuda Fire & Marine's domestic business, there was a selling frenzy of the company's common stock, with 143,558 shares being sold for $71,779 in just two months.

The common stock of newly-formed BF&M, on the other hand, soared from its initial traded price of $7 to a 1993-high of $11 before dropping back to $7.50 recently, partly due to negative publicity surrounding the company.

Mr. Collis said the change in the preferred shares had allowed preferred shareholders to get back the money they had put into Bermuda Fire & Marine.

"It was a way of allowing both classes of shares to participate in the dividend,'' he said. "In order to achieve the reorganisation we had to redeem all the preferred shares.'' On allegations of asset-stripping, he said: "The only thing that went out were the shares in the business but the business is only the ability to earn money in the future.

"BF&M subsequently raised the cash for its own operations and to meet the commitments to the policyholders. It raised $15 million by selling preferred shares to the public.'' He added: "By selling the Bermuda business, we preserved its value. If it had not been preserved it would have reduced in value because of the burden of the international side, leaving less for the creditors.'' "My whole theory back in the annual reports was that we were having to make additional provisions in our accounts for potential future liabilities.

"People in the market were beginning to worry where this thing would ever end. We faced the prospect that the local business would be diminished. That's where the benefit was made to the creditors.'' Mr. Collis also argued that the split-up of the company "protected the creditors of Bermuda Fire & Marine'' by freeing-up illiquid assets in order to meet the claims of creditors.

"Bermuda Fire & Marine's assets were tied up in real estate and foreign insurance companies that it owned,'' he said.

"It decided to reorganise, which included selling off the real estate for fair value and the foreign insurance companies at a profit. No physical assets other than property was transferred.

"The result of the reorganisation was to create real assets in Bermuda Fire & Marine that weren't available previously to pay creditors.'' Asked how it was possible for a fair price to be obtained when, in effect, the buyer and the seller were controlled by the same people, Mr. Collis said: "The price was negotiated based on third-party advice.'' Was an effort made to sell the domestic business to a third-party, such as Colonial Insurance, backed by the wealth of Sir David Gibbons and his family, or the Argus group, to find out if a higher price could be achieved? "No attempts were made to sell the business to a third party,'' said Mr.

Collis. "It was believed that no third party was capable of making a reasonable offer.

"The attitude of potential purchasers would have been `why pay good money for that when we can pick it up later at a discount?'. Nobody would have paid good money for it. There had been other circumstances where businesses had been for sale at the time and couldn't find buyers prepared to pay a fair price.'' He added: "We had an independent auditor accounting the books and assessing the value at arm's length.'' That auditor was accounting firm Cooper & Lines, one of whose partners, Mr.

David Lines, is the brother of Bermuda Fire & Marine director, Donald.

Additionally, the law firm which advised Bermuda Fire & Marine about the legality of the deal was Conyers, Dill & Pearman, of which Mr. Collis is the senior partner.

Critics of the deal point to the potential for a conflict of interest. "It's impossible to avoid conflict of interest in this community,'' said Mr. Collis.

"Anyone who knows anything in this community knows that Donald and David Lines are at each other's throats. In any event, the work was all done by other auditors of the firm.'' The other professional advice at the time of the deal came from Tillinghast, one of the world's best-known firm of actuaries.

Mr. Collis said: "The advice from Tillinghast was one thing and the advice from Cooper and Lines was another. Both, in my view, were independent third parties, which was accepted by the board. Where is there better value and better advice to be obtained?'' He added: "We received independent reports from Tillinghast every year from 1984 onwards as to the extent of our liabilities.

"When the deal was done, Tillinghast knew the reason for it and they gave a report based on what they thought the liabilities of the company were.

"Bermuda Fire & Marine made provisions based on Tillinghast's report for all of the potential future liabilities and considerations.'' After selling its domestic business to BF&M, Bermuda Fire & Marine had "$10 million in excess of its liabilities, as advised'', he said.

In 1990, Bermuda Fire & Marine had assets of $161 million and estimated liabilities of $130 million, and in 1991 had assets of $61.7 million and estimated liabilities of $52.7 million.

Provisional liquidator, Ernst & Young, confirmed that Bermuda Fire & Marine, at first look, appeared to have a "positive net worth'' based on the 1992 draft financial statements, although doubts remain about the accuracy of these figures due to problems obtaining information from London.

How much faith Bermuda Fire & Marine could place in Tillinghast's projections is open to question, say creditors.

From 1984 until 1990, Tillinghast underestimated the reserves needed to meet claims for every year apart from 1988.

The line: "Once again we must report that the discontinued business has not developed in accordance with actuarial projections'' became a common one in Bermuda Fire & Marine's annual reports.

Despite this, Mr. Collis was adamant that creditors were misleading the public when they claimed to be collectively owed $100 million.

"They are only potential future claims,'' said Mr. Collis.

"The company is unable to be sued on claims for the future. No suit can be made for these sums. They are not effective debts. That's an important factor.'' However, the `long-tail' nature of the pollution and other high-risk reinsurance which Bermuda Fire & Marine provided has caused most experts to predict that extensive future claims can reasonably be expected.

US creditor Transit Casualty, for example, is owed only $2.6 million in cash but claims Bermuda Fire & Marine has failed to post letters of credit for $8 million and says there is a further amount of some $23 million in IBNR (incurred but not reported) claims.

Mr. Collis attacked The Royal Gazette for its reports on the row last week and said the newspaper "did not give the other side''.

The newspaper had tried for two weeks to speak to Mr. Collis about the matter but had not received a reply, while several others who were directors of Bermuda Fire & Marine in 1991 had declined to comment.

Mr. Collis said Bermuda Fire & Marine had applied for winding-up in order to introduce a scheme of arrangement which will allow creditors "to be paid fairly over a reasonable period of time''.

"It was concern at the attitude of some of our reinsurers which gave rise to our desire to go into a scheme of arrangement for the benefit of creditors,'' said Mr. Collis.

Bermuda Fire & Marine's reinsurers have been seeking to get out of contracts they have with the company, alleging that they were misled over the arrangements.

"The primary motives for winding-up were first of all to provide protection for both creditors and shareholders but, particularly, the local policyholders,'' he said.

However, when Transit Casualty tried to have Bermuda Fire & Marine wound-up some weeks before, Bermuda Fire & Marine's directors blocked the move by obtaining a court injunction.

Mr. Collis said he believed the UK Department of Trade and Industry was looking into the company's affairs largely because of the publicity it had attracted and not because there was any evidence of wrongdoing.

The DTI is concerned that Bermuda Fire & Marine, which needed a licence to operate in London where its disastrous international business was written on the H.S. Weaver's stamp, may have breached statutory asset/liability ratios.

According to Lloyd's List, Bermuda Fire & Marine had an authorised UK branch until 1985 -- two years after it withdrew from Weaver's.

Under UK insurance laws, Bermuda Fire & Marine was obligated to keep sufficient assets in the UK to meet future claims during the period its Weaver's stamp business is in run off.

As insurance publications in the US and the UK begin reporting on the company's collapse, Mr. Collis said he was concerned about possible damage to Bermuda's reputation, for which he blamed the media and creditors.

THE HON. CHARLES COLLIS -- `The result of the reorganisation was to create real assets in Bermuda Fire & Marine that weren't available previously to pay creditors.'