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Note: In fulfillment of a request of the New York insurance law to post cash or sureities, the Transnational Insurance Co Ltd, a Cayman Island company that participated in a reinsurance scheme, had posted a standby LC for US$ 380,000 issued by Barclays Bank plc. The participant was sued in New York by the New York Insurance Commissioner on behalf of the insolvent reinsurer, Delta Reinsurance Co. After judgment was entered against the participant, reinsurer drew on the LC and was paid. Reinsurer subsequently filed a claim in insolvency in the Caymans against the participant who had become insolvent for further indemnification. The liquidators of the applicant/participant resisted the claim unless the beneficiary/reinsurer agreed to place the proceeds of the LC into the bankruptcy estate (under the Hotchpot principle). The Grand Court of the Cayman Islands, Smellie J., ruled in favor of the liquidator, disallowing the claim unless the proceeds were returned. On appeal, the Court of Appeal of the Cayman Islands, Zacca, Kerr, & Collett, J.J., reversed. On appeal, the Privy Council, Lord Scott of Foscote, affirmed the decision of the appellate Court on the ground that funds received prior to insolvency need not be returned to the estate in order to make a claim against the estate.

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