EMLICO's Bermuda liquidators have opposed Kemper Re's motion to participate in the federal court hearing in filings before Justice Woodlock, calling it untimely, disruptive, unjustified by any public or private interest and prejudicial to the orderly consideration of the pending motions.

The joint liquidators, in filings to the federal judge, have declared that Kemper's motions are neither timely nor useful.

The reinsurer, they argue, has no legitimate interest in the proceedings and should not be allowed to participate.

The liquidators' brief states: "It is not a creditor, a shareholder or a policyholder of EMLICO. Kemper is merely a debtor who owes money to EMLICO.

Kemper has no right to participate in determining the management or structure of EMLICO's estate.'' They took a cue from Justice Woodlock's comments 30 days ago, recounting his view at the time that it seemed clear "what the reinsurers' interests would be, which is to prolong this as long as possible to avoid paying out.'' Kemper's claims arise solely out of its reinsurance contracts with EMLICO, the liquidators said, and the appropriate and exclusive forum for a resolution of those claims is arbitration and private contract actions, not the liquidation process.

The liquidators also said that Kemper's application to be heard before Justice Woodlock comes just days before the hearing, without any explanation as to why "it should be permitted to undermine the orderly litigation process by filing submissions after the parties have filed, and in derogation of the briefing schedule established by the court.'' And Kemper's voluminous and extraneous, fact-oriented submissions are not useful, the liquidators submitted, because a friend of the court assists the court by providing information of some matter of law in regard to which the court is doubtful or mistaken, rather than one that gives a highly partisan account of the facts.

They said the reinsurer was not focusing on the legal issues but merely reiterating "the same baseless accusations and assertions that Kemper has previously raised without success in numerous other courts.'' And the joint liquidators, their lawyers said, should not be burdened with having to answer the same partisan claims they have already spent millions of dollars in legal fees litigating with Kemper over.

"There has been no showing,'' the lawyers added, "that Kemper's added participation will advance any cause other than the strategic goal of delay and prejudice to the process.'' EMLICO's lawyers also pointed out that Kemper has made no showing that it is not adequately represented by the commissioner, whose interests in asserting control over EMLICO's liquidation aligns with Kemper's interests.

They discounted the suggestion that the two would again become adversaries when it came to the application of Massachusetts law.

They added that Kemper's requests that it should be allowed to also participate in oral argument should be denied on separate grounds, because friends of the court are generally allowed to participate in oral arguments under extraordinary circumstances.

Meanwhile, lawyers for the liquidators of EMLICO and lawyers for the commissioner of insurance are reporting no progress in their negotiations with respect to a potential protocol.

The two parties said in a joint statement that the commissioner is not conceding that the joint liquidators represent EMLICO, or are a proper party to the proceeding.

The two sides, after being asked by the federal judge to seek the cross border protocol, conferred by telephone two consecutive days and then met on the third day for continued preliminary discussions.

The two sides were in disagreement from the start as to what such a protocol should include. That disagreement continued over several days of talks.

And after proposing conflicting plans for a joint liquidation, the two sides agreed: "The negotiations concerning a protocol are at an impasse because the commissioner and joint liquidators have strongly held opposing views.

The commissioner, with the backing of the Supreme Judicial Court, expects to fulfil her role in taking control of an insolvent Massachusetts insurer. And she has indicated that control can equate to no less than a co-equal role with the joint liquidators.

The joint liquidators want the commissioner, instead, to have a consultative or ancillary role in the liquidation, reflecting the fact that the liquidation of EMLICO has already been going on for more than two years.

The joint liquidators want a mediator to address the impasse between the two groups, as was suggested by the Chief Justice in the event no agreement could be reached by the two groups.

The commissioner's view is that because of the substantial differences in principle between the two sides, mediation is not appropriate, especially on the important point of jurisdictional control.

She wants the case sent back to the Supreme Judicial Court, so that the commissioner, as receiver, may proceed to Bermuda and request that the Bermuda winding-up of EMLICO be stayed in light of the predominant Massachusetts and US interests.

COURTS CTS