An American businessman?s bid to wind up two Bermuda insurance companies was struck out on Tuesday by the Court of Appeal.

Stephen Friedberg, president of Pennsylvania-based Research Underwriters Financial Associates, Inc., had filed the petitions to wind up IPC Mutual Holdings Ltd. and Mutual Holdings Bermuda Ltd., claiming they owed him $6,695,000 in dividends minus a $2 million payment that has already been made.

After the Appeal Court decision, Mr. Friedberg, who held preferred shares in the companies, told that he had been doing business in Bermuda for ten years but would no longer do so after his experiences with the companies.

?We probably lost about $4.6 million and do not think we will ever do business in Bermuda again,? he said.

He recalled placing a call to the Bermuda Monetary Authority about the dealings with the companies but said they never companies but said they never returned it and said the whole affair could damage the Bermuda captive insurance sector?s reputation. The case came to the Court of Appeal after Mr. Friedberg?s former lawyer Ian Kawaley advised him to file petitions to wind up the companies. On June 12, 2003 they won a declaratory judgment to do so.

IPC Mutual Holdings appealed the judgment, arguing that the amount Mr. Friedberg claimed he was owed was disputed. Instead, the company argued that Mr. Friedberg should continue to pursue an earlier lawsuit against the company for the amount rather than wind up the companies.

The companies? lawyer Narinder Hargun also told the Court that Mr. Friedberg claimed he was owed the money as dividends, but the companies had never formally declared a dividend.

?There is a dispute as to what sum, if any, is due between the parties,? Mr. Hargun said. ?The company disputes that these figures are due for dividends.

?He had prior to filing the wind up petitions commenced proceedings in Supreme Court for a declaration that he was owed money.?

Mr. Hargun questioned the motive behind the petitions saying: ?The motive was to force payment when the amounts were disputed.?

He called for the petitions to be dismissed and suggested to the Court: ?If he believed he had a valid claim against the company he should have proceeded with the Supreme Court action in which he started.

?If debt is disputed, the petitioner doesn?t have the legal standing to petition.

?If the debt is in dispute then the debtor cannot pay if they don?t know what exactly to pay.

Referring to the petitions to wind up the companies, Mr. Hargun said: ?Once you put a company into liquidation then they cannot pay the dividends.?

Mr. Friedberg?s lawyer Delroy Duncan, argued that as a preferred shareholder, the company had ?a clear obligation? to pay him dividends, regardless of whether they were formally declared.

?Based on certain accounts, there is evidence of payments that were made without formal declaration of dividends that the appellants now seek to rely on.

?The arrangement did not work with formal declarations. He had never received a payment that way.?

Mr. Duncan said his client was paid $312,500, $937,500 and $500,000 in May of last year without a formal dividend declaration.

Mr. Hargun said: ?The dividend has to be declared ? until then no debt is due.?

Court of Appeal President Edward Zacca allowed the appeal and said both petitions would be struck out.

After the decision was issued, Mr. Friedberg said he was unhappy with how the companies had dealt with him since he filed the action, saying they had issued new financial statements that no longer showed a profit due to him, but instead showed that he owed them $800,000.

?The financial statements showed we had substantial profit. We asked for the money to be released but they would not release it.?