Arrangement which will allow virtually all of the company's assets to be distributed to them by late 1994 -- less than ten years after the winding-up began.

Joint liquidators Mr. Charles Kempe and Mr. Nigel Hamilton, of Ernst & Young, believe the winding-up of Mentor will become the model for similar liquidations in the future.

"Following the distribution, the scheme represents the first `cut-off' type scheme of arrangement within a liquidation,'' said Mr. Kempe.

"It will require creditors to value any remaining unreported claims on an actuarial basis which will then be adjudicated upon by the joint liquidators.

"As such, the scheme represents a pioneering attempt to expedite and finalise the liquidation through the usage of actuarial techniques.'' He added: "The scheme will result in the fastest and most effective completion of the liquidation of a major reinsurer of the size and complexity of Mentor on record and will be a forerunner to the resolution of similar reinsurance insolvencies.'' Under the provisions of the Scheme, which goes before Bermuda Supreme Court for sanction on March 23, all known and potential creditors of Mentor will have until June 30 to finalise and file any and all remaining claims with the joint liquidators.

The adjudication of those claims is expected to take 18 months, after which all of the assets will be distributed on a pari passu basis to the admitted scheme creditors.

Since their appointment in June, 1985, the joint liquidators have increased the available assets of the Estate by about $158 million.

This amount includes reinsurance recoveries of $54 million and $40 million in cash settlements related to litigation against the Mentor's shareholders, directors and auditors.

The recovery of such a large sum is particularly pleasing to the liquidators, who survived an attempt to oust them a few years ago by some creditors who claimed the liquidation was becoming bogged down by litigation.

These creditors lost their battle when Mentor's largest creditors stood firmly behind Mr. Kempe and Mr. Hamilton.

The adjudication of creditors' claims from the first filing deadline has resulted in net admitted claims of $323 million, upon which a dividend of 25 cents on the dollar was paid last year.

Mr. Kempe said that, as reinsurance liquidations typically take many years to complete due to the statutory framework for dealing with them and the long-term nature of their liabilities, it was decided that an arrangement approved by creditors would allow them to opt out of the statutory framework and accelerate the completion of the case.

"We polled our major creditors and the message received was that they did not believe that allowing the lengthy process of liquidation to continue to the natural maturity of underlying liabilities (perhaps 20 years or more from now, would significantly enhance their return from the Estate.

"We developed this Scheme which provides for creditors to estimate any remaining claims, rather than wait, observe and evaluate actual claim emergence.'' Mentor began life in 1968 as a typical Bermuda captive insurance company, insuring the risks of the oil drilling rigs owned by its US parent, the Ocean Drilling and Exploration Co. but by the time of its collapse, in 1985, less than ten percent of its business had to do with insuring oil-drilling risks.

Its debts were so large that the liquidation became one of the largest insurance liquidations in history.