Liquidation Insurance

Liquidation Insurance provides cover to unlock capital held in reserves for legacy and contingent residual liabilities where investment funds are reaching the end of their fund lifespan or where corporate groups are looking to be rationalised.

As investment funds near the end of their lifecycle, investors can become frustrated by capital tied up for residual liabilities. Liquidation Insurance can be used as a strategic tool for fund managers to maximise return, reducing fund administration costs and ultimately allowing a more efficient distribution of proceeds to investors.

The BMS Private Equity, Mergers & Acquisitions and Tax team works closely with you and your advisers to ensure that Liquidation Insurance provides comprehensive coverage against all outstanding residual liabilities thereby providing an effective method to accelerate a wind up or liquidation of a fund, distribute proceeds and ensure a clean break.

Policy Benefits

  • Facilitates the accelerated winding up or voluntary liquidation of a private investment fund or a corporate structure.
  • Helps to reduce ongoing administration and reporting costs of the original investment structure.
  • Maximises the distribution of cash proceeds from fund structures helping to improve rates of returns.
  • Protects fund managers against any personal liability they may face in the relevant jurisdiction.

This policy can:

  • Be taken out by fund managers or the general partner of the fund covering the residual liabilities.
  • Cover all financial losses arising from warranties and certain indemnities given as part of its historical divestments.
  • Have either the seller or the specific investment fund named as the insured. Furthermore, liquidators can be named as a party to the policy to help aid the effective winding up.
  • Cover both share and asset disposals.

How does it work?

  • The policy term matches the period of the outstanding residual liabilities and can last up to 10 years for certain matters.
  • Coverage can generally be from “ground up” i.e. zero or minimal excess.
  • A one-off premium (typically 1%-3% of the policy limit) is payable within 20 business days of the inception of the policy.

The process for putting the policy in place is straightforward given that a number of these liabilities would be near their expiry. If vendor due diligence was prepared and or any analysis undertaken on the underlying residual liability, then this would speed up the underwriting process.

Pawar Tan

Tan Pawar

Head of Private Equity and M&A

T: +44 (0)20-7480-0264
M: +44 (0)7341-133-007
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Andrews Dean

Dean Andrews

Head of Tax Liability Insurance

T: +44 (0)20-7480-0308
M: +44 (0)7876-815-643
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Wallace Sophie

Sophie Wallace

Divisional Director

T: +44 (0)20-7480-0378
M: +44 (0)7824-605-613
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Leitch Harry

Harry Leitch

Director, Head of Deal Origination

T: +44 (0)20-7480-0346
M: +44 (0)7770-990-368
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Kemp Simon

Simon Kemp

Group General Counsel

T: +44 (0)20-7480-7288
M: +44 (0)7825-844-988
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Marcus Christie

Associate

T: +44 (0)20-7374-5937
M: +44 (0)7826-532-908
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Simon stephan

Stephan Simon

Head of W&I Insurance – UK

M: +44(0)7785-720-944
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Kanwar Chandini

Chandini Kanwar

Associate Director

T: +44 (0)20 7374 5990
M: +44 (0)7825 421 394
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UK

One America Square
London EC3N 2LS
United Kingdom

T: +44 (0)20-7480-7288

Stone Jason

Jason Stone

Managing Director, Canada

M: +1 416-845-4572
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Allen logan

Logan Allen

Associate

M: +1 416-722-8171
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Toronto

1 University Ave,
Toronto, ON M5J 2P1

Lee Sandra

Sandra Lee

CEO & Head of PEMAT, Asia

T: +852 3579 5485
M: +852 9255 7088
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De Lange Martijn

Martijn de Lange

Managing Director

T: +852 3579 5486
M: +852 9772 9951
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Wong Aris

Aris Wong

Managing Director

M: +65 8321 6236
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Sagar Mehta

Associate Director

M: +65 8010 2687
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Swee Faith

Faith Swee

Senior Associate

M: +65 8949 3439
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Jessica Xi

Senior Associate

T: +852 3579 5486
M: +852 6713 1883
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Ryan Heng

Senior Associate

M: +65 8792 6334
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Yongtak Lee

Yongtak Lee

CEO & Managing Director

T: +82 2 6405 1021
M: +82 10 3110 2807
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Kim Tamara

Tamara Kim

Chief Legal Officer & Senior Director

M: +82 10 7365 4628
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Kaylee Kim

Associate

T: +82 2 6405 1021
M: +82 10 7106 1709
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Cha Chloe

Chloe Cha

Senior Associate

T: +82 2 6405 1021
M: +82 10 7164 7071
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Jayasundara Nelumi

Nelumi Jayasundara

Associate

M: +852 9801 3916
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Cho Wooyoung

Wooyoung Cho

Junior Associate

T: +82 2 6405 1021
M: +82 10 7120 1827
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Singapore

138 Market Street #05-01,
CapitaGreen,
Singapore 048946

T: +65 9384 6484

Hong Kong

4/F, Lee Garden Three,
1 Sunning Road,
Causeway Bay, Hong Kong

Seoul

#1908 19Fl., S Tower Bldg.,
82 Saemunan-ro, Jongno-gu,
Seoul, South Korea

T: +82 2-723-1800

Godden Andrew

Andrew Godden

Chief Executive Officer - Australia

T: +61 (2) 9165-3502
M: +61 (0) 432-805-729
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Sydney

Level 3,
222 Clarence Street,
Sydney NSW 2000

T: +61 (2) 9165-3500

Claro Fernando

Fernando Claro

Chief Executive Officer, Iberia

T: +34 91-419-76-30
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Madrid

c/ Serrano, 240. Planta 5
28016 Madrid

T: +34 91-419-76-40

Astorqui Jose

Jose H. Astorqui

CCO, Latin America & Caribbean

T: +1 786-581-1899
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Miami (US)

800 Brickell Avenue
Suite 350, Miami, Florida 33131

T: +1 786-581-1896