It was one of Bermuda's biggest ever corporate collapses, it called into question the integrity of some of the Island's most distinguished sons, and cost $35 million in legal fees.

It was the Bermuda Fire civil suit, which yesterday settled out of court for at least $35 million.

No one has admitted wrongdoing on either side and the five directors, accountants, legal advisors and 1,000 shareholders being sued by the liquidators appear to be off the hook.

After the court case was adjourned yesterday, BF&M said they had settled out of court -and accepted no liability for wrongdoing.

The other defendants in the case have also settled out of court - but have not disclosed the sum they have agreed with the liquidators.

John McKenna, of Ernst & Young, one of the joint liquidators of the Bermuda Fire & Marine Insurance Company, said last night: "After 100 days in court everyone agreed to compromise on the claims that were issued and as a result there was agreement that the claims will be withdrawn subject to BF&M shareholders agreeing to that.'' The liquidators could be in for a further cash windfall in the year 2004 on top of the $35 million, when they will be able to buy new stock issued by BF&M at pre-set price.

They could then go on to sell this for a higher price making a profit which will go to the Bermuda Fire creditors.

Insiders in BF&M say that the deal could see BF&M get a $12.4 million cash boost, while the liquidators get a cash boost.

But shares in the short term will be worth less. Lt Col Michael Darling, BF&M's Chairman said the value could fall as much as nearly $11 a share.

He said: "The effect of the $35 million settlement on the company's balance sheet at December 31, 1999 will be to decrease shareholders' equity by a like amount while the option granted to Bermuda Fire to subscribe for common shares in the company will have no effect on that balance sheet.

"The payment of the $35 million will reduce earnings for the year ending 31 December, 1999 by a like amount and both earnings per share and book value per share are expected to decrease by $10.88 in 1999 as a result of this one time charge.'' In May, an army of top British lawyers jetted in to the Island in what was being seen a historic legal battle.

The case questioned the liability of the people in charge of a large corporation and what responsibility they have to their shareholders when making decisions.

The liquidators claim that splitting the company in 1991 left the unprofitable part of the company with Bermuda Fire, while BF&M got the cream of the company -- the profitable local insurance deals.

By 1993 Bermuda Fire had gone bust. It left behind an estimated $450 million in debts to international creditors.

And as the legal eagles rolled up their sleeves for battle earlier this years it was not just those watching out for what some of the biggest business names in Bermuda would say on the stand, but other companies were looking to see if it would set a precedent that could lead to a long line of litigations.

The trial was followed in great detail, from when the case began in May, and soon it proved itself to be a complex and legally difficult case.

Gregory Haycock was the first director to take the stand. His hours upon hours of testimony was just a taste of things to come.

He was examined and cross-examined in minute detail about what happened in the offices of Bermuda Fire all those years ago.

Next through the wringer was William Cox, who was only let off the hook last week.

When the settlement came through Michael Collier was on his second day of testimony.

All three had been cross examined by the five teams of lawyers representing the various interested parties.

Clare Montgomery, QC for liquidators Ernst & Young, was particularly hard on the good and the great on the stand.

The liquidators charged that the directors at the time must have known or suspected that Bermuda Fire was insolvent. This was a clear breach of their duties to the company and its shareholders, and led to the company's collapse in 1993.

Bermuda Fire's former directors have stridently denied the charges, saying they relied on accurate figures from their accountants and the legal advice of Conyers Dill & Pearman and were confident the company was solvent and no fraudulent transaction was taking place.

The case has been also problematic given both the time involved and the difficulty in establishing exactly what was in Bermuda Fire directors' and managers' minds at the time they contemplated the split. The role of its advisers, especially accountants Cooper & Lines, has been hotly disputed in the custom-built courtroom.

A strong motivation for the agreement was the great likelihood of a bitter appeals process regardless of the ultimate judgment by Puisne Judge Vincent Meerabux.

It would have gone through several appeals processes, which could have taken many years, with each month the bill ticking up the millions.

The settlement announced yesterday required "lengthy and complex negotiations'', according to Glenn Titterton, president and chief executive officer of BF&M.

He added: "I am delighted with the outcome, which will bring this unfortunate matter to a conclusion once and for all.'' In a statement issued by BF&M, the company said the growing costs of the dispute had prompted a settlement.

It read: "BF&M received strong legal opinion in its favour bit it has not been able to ignore the uncertainties inherent in this very complex piece of litigation.

"The litigation requires the close attention of senior management and diverted them from expanding the business to its fullest potential.

"At the same time BF&M has had to face substantial legal costs and the commercial impact of a prolonged and high-profile legal case.'' It went on to state that the current case would not have concluded until at least December 2000.

"Moreover, there was every likelihood that whichever way the judgment went , it would have been appealed by the losing party, ultimately to the Privy Council in London, a process which would have taken several more years.'' The deal was welcomed by members of the business community across the Island.

Chamber of Commerce president Cris Valdes-Dapena said: "Seeing it settled amicably out of court is undoubtedly the best thing in the long run for Bermuda.'' Chairman of the International Companies Division of the Chamber of Commerce David Ezekiel said last night: "It is marvellous that this is behind us.'' David Ezekiel Cris Vales-Dapena BUSINESS BUC