Majestic Capital Expected to File Bankruptcy
Bermuda-based Majestic Capital Ltd expects to file for bankruptcy protection after its sale to a private equity firm fell through, according to a Reuters report today [Mar.21].
“Insurer Majestic Capital Ltd said it expects to file for bankruptcy protection after its sale to a private equity firm fell through, triggering an 85 percent fall in its shares,” said the report.
“In September, Bermuda-based Majestic had agreed to be bought by Bayside Capital Partners for $7.8 million in cash. However, the private equity firm said a material deterioration in Majestic’s capital surplus and failure to secure regulatory approval led to the termination of the deal.”
In a statement released Majestic Capital, Ltd. said, “In its termination notice, Bayside cited a material deterioration in Majestic Capital’s capital surplus, an inability to secure regulatory approval for the merger, and a failure to satisfy the closing condition with respect to termination of Majestic Capital’s lease for office space in Poughkeepsie, New York on terms acceptable to Bayside. As a result of Bayside’s termination of the merger agreement, Majestic Capital’s previously scheduled Special General Meeting of Shareholders to vote on the merger agreement scheduled for March 28, 2011 has been cancelled.”
“The failure to complete the merger with Bayside is expected to result in a downgrade of Majestic Insurance Company’s “B++” financial strength rating and a conservation proceeding by the California Department of Insurance. As a result, Majestic Capital and its subsidiaries expect to seek protection under applicable United States and Bermuda bankruptcy and other similar laws for the protection of creditors.”
