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 and Restructuring 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

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M: +44 (0)7825-844-988
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Marcus Christie

Associate

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M: +44 (0)7826-532-908
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Kanwar Chandini

Chandini Kanwar

Associate Director

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M: +44 (0)7825 421 394
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Horn Justin

Justin Horn

Senior Associate

M: +44 (0)7721 815 230
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UK

One America Square
London EC3N 2LS
United Kingdom

T: +44 (0)20 7480 7288

FREILICH eric

Eric Freilich

Director, Legal Counsel, Private Equity and M&A

M: +1 647 533 9699
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Allen logan

Logan Allen

Director, Private Equity and M&A

M: +1 416-722-8171
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Toronto

161 Bay Street, Suite 4140,
Toronto, ON M5J 2S1

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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Jessica Xi

Associate Director, Greater China Client Lead

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Lai Cathy

Cathy Lai

Business Development Lead

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Nelumi Jayasundara

Senior Associate

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Hong Kong

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Godden Andrew

Andrew Godden

Chief Executive Officer - Australia

M: +61 (0) 432-805-729
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Sydney

Level 3,
222 Clarence Street,
Sydney NSW 2000

T: +61 (2) 9165 3511

Ong Rae

Rae Ong

Business Development Lead

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Ryan Heng

Director

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Ryan Soh

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Wei Lit

Wei Lit Wong

Associate

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Singapore

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#09-05,
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T: +65 6018 0537

Claro Fernando

Fernando Claro

Chief Executive Officer, Iberia

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Schmitz Kai

Kai Schmitz

Divisional Director – Private Equity, M&A and Tax

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Ricardo Lecaro

Ricardo Lecaro

Divisional Director – Private Equity, M&A and Tax

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Madrid

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28046 Madrid

T: +34 91 419 76 40

Yongtak Lee

Yongtak Lee

CEO & Managing Director

T: +82 2 6405 1021
M: +82 10 3110 2807
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Cha Chloe

Chloe Cha

Senior Associate

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M: +82 10 7164 7071
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Minji Ha

Senior Associate

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Kaylee Kim

Associate

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Cho Wooyoung

Wooyoung Cho

Junior Associate

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M: +82 10 7120 1827
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Seoul

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82 Saemunan-ro, Jongno-gu,
Seoul 03185

T: +82 2-723-1800

Schmitz Kai

Kai Schmitz

Divisional Director – Private Equity, M&A and Tax

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Ricardo Lecaro

Ricardo Lecaro

Divisional Director – Private Equity, M&A and Tax

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Miami (US)

800 Brickell Avenue
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T: +1 786-581-1896

Hewitt Tim

Tim Hewitt

Head of BMS Japan/ Managing Director

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Kaori Iwai

Associate

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