Directors and shareholders in the epic case against Bermuda Fire & Marine Insurance Company Ltd., rocked the insurance world on the Island for almost a decade, paid out $50 million in an out-of-court settlement back in 1999, The Royal Gazette can reveal.

Plus as part of the same settlement deal the liquidators got options for a million shares in BF&M now worth over $15.7 million ? making the total settlement deal worth over $65 million.

The company was split from BF&M in 1991 and went belly up in 1993 owing an estimated $1 billion to its creditors, and its liquidators decided to take the battle to court.

Bermuda Fire liquidators were suing BF&M, some of its 1,000 shareholders, two insurance companies, a reinsurance company, five individuals who were former board members and the accountants and legal advisors to the former directors

According to legal documents filed by the liquidators of Bermuda Fire as part of a bid to settle accounts with the company?s creditors early, the total amount paid to them following the settlement with the directors was $50 million, and $24 million of that went on legal costs of the 100 days of trial.

At the time the figure was never disclosed and the figure was said to be at least $35 million, and the other defendants were making their own settlement which left the estate ? namely the shareholders of the company and legal counsel.

The liquidators, Ernst and Young, were suing BF&M and some of its subsidiaries, Bermuda Fire?s five former directors who sat on the finance committee, accountants Cooper & Lines and legal advisors Conyers Dill & Pearman, and a large number of Bermuda Fire?s shareholders for damages over the company?s collapse.

In December, 1999, BF&M directors agreed to the out-of-court settlement because of soaring legal costs.

The five directors, Gregory Haycock, William Cox, Michael Collier, Charles Collis (deceased at the time of the trial) and Donald Lines, were believed to have paid out at as much as $10 million each ? but at the time there was no confirmation of this figure.

At the time the case was predicted to drag on for another year in Bermuda, with the prospect of years of further appeals in London. More than 1,000 shareholders in local insurer BF&M could have lost their investment if the liquidators won the case.

The action, which started in May, 1999, saw pillars of Bermuda?s business world take the stand over the splitting of Bermuda Fire into two separate businesses in 1991.

BF&M was created for the profitable domestic business, while the less attractive international business was left with Bermuda Fire.

By 1993 Bermuda Fire went bust, owing huge debts internationally of about $50 million. Overall it was estimated at the time that the company had debts of $1 billion.

The liquidators claim was that the directors, accountants and legal advisors knew or suspected that Bermuda Fire was insolvent when the businesses were separated, taking the cream of the business for themselves.

They argued that they were negligent in their duties in creating BF&M, the profitable local insurer.

The defendants in the case included the 1,000 shareholders, two insurance companies, a reinsurance company, the five individuals who were former board members and the accountants and legal advisors to the former directors.

The legal documents also show that Bermuda Fire liquidators also own over one million shares in BF&M, worth $15.7 million.

The new information came to light as the Bermuda Fire liquidators look to pay out creditors early about $222 million within the next three years. This will take the total amount paid out to creditors to $300 million.

They put the estimate of ultimate liabilities ? or the amount owed by the failed Bermuda Fire at $823 million, down from $1.2 billion registered in 1998.