Former director of Bermuda Fire Gregory Haycock yesterday denied that there was any question of insolvency at the time of his company's 1991 reorganisation.

"The issue of insolvency was not realistically on anyone's mind,'' Mr.

Haycock told Puisne Judge Vincent Meerabux during his cross-examination by QC Clare Montgomery, who represents the liquidators in the Bermuda Fire case at Supreme Court.

Mr. Haycock said Bermuda Fire as of mid-1991 had "about 160 million in assets, 30 million in equity and a large balance of cash ... the company had been healthy for years, and there was no reason to think it wouldn't be healthy for years in the future.'' However, Ms Montgomery pointed to a meeting of Bermuda Fire's finance committee on June 24, 1991, at which she charged that director Donald Lines said banks would be unwilling to underwrite "a share issue by Holdco'' -- a holding company proposed as part of the reorganisation -- because of Bermuda Fire's questionable solvency. Mr. Haycock told her: "I don't think that was stated at the meeting, that I know of.'' Nor did he recall Mr. Lines then mentioning a "moral obligation'' on the part of a subsidiary to its parent company.

Ms Montgomery also questioned the draft minutes of the meeting regarding Mr.

Lines' alleged remark. "I suggest it was moved deliberately,'' she said, "to avoid a suggestion in the official minutes that there was a concern about solvency.'' Mr. Haycock denied this.

Turning to a finance committee meeting of July 4, Ms Montgomery pointed to a figure for Bermuda Fire's overseas accounts figure of $47,013,590. Mr. Haycock freely admitted that he saw no need to calculate for himself whether this figure was precisely what was required: "I was satisfied on a basis that the information we had received was the most up-to-date that we could get,'' he said, also denying that these figures were given as "rough''.

"You weren't there as a rubber stamp,'' said Ms Montgomery.

"I didn't say that,'' he answered. "It was up to us to be satisfied that the advice and the work of the finance committee was enough to make that decision.'' Mr. Haycock then said that on a July 9 board meeting: "I and others asked questions about that figure ($47 million) ... and questioned whether or not all liabilities that should be included were included.'' Moving on to a Press release announcing Bermuda Fire's reorganisation scheme, Ms Montgomery again charged that a document misrepresented the facts by implying that Bermuda Fire -- now reduced to a business in runoff -- "was going to continue as a thriving business.'' Mr. Haycock pointed to the income generated by the sale of preference shares, to which Ms Montgomery answered: "The preference share income of less than a million dollars a year was not an improvement on the situation, was it?'' "The point is irrelevant,'' Mr. Haycock said. "The point is that the international business contained in Bermuda Fire had significant assets to meet the liabilities as calculated.'' Robin Potts QC, who represents the five former directors of Bermuda Fire, subsequently asked Mr. Haycock: "You were not an executive director of Bermuda Fire -- did you think you personally had to conduct an investigation into the makeup of that figure ($47 million)?'' "I don't think it was ever intended that any of us on the finance committee should,'' Mr. Haycock answered.

Referring to a 1991 circular on reorganisation addressed to Bermuda Fire's shareholders, Mr. Potts asked: "Were there any international activities carried out by Bermuda Fire at this stage other than runoff?'' Mr. Haycock said there were not. "The international business had been stopped for many years,'' he added, "and the local shareholders would have been aware of that.'' The case continues today.

Robin Potts BUSINESS BUC