On April 16, 2012, the Supreme Court of the State of New York, Nassau County, entered an Order of Liquidation and Approval of the ELNY Restructuring Agreement (Order) and accompanying memorandum decision. The Order was entered over the objections of a number of ELNY payees, and followed an 11 day hearing that took place in March 2012. Among other things, the Court: approved the Restructuring Agreement that had been submitted by the New York Superintendent of Financial Services (Superintendent); found ELNY to be insolvent; converted the Rehabilitation of ELNY to a Liquidation effective as of the closing date of the Restructuring Agreement; and directed counsel for the New York Liquidation Bureau to serve a copy of the decision with notice of entry upon all ELNY payees.
In the wake of the Court’s ruling, one question on the minds of many ELNY annuity owners is: now what? In this regard, it is important to note that the Order directs the Superintendent to “continue to direct the full payment of all benefits” under all ELNY annuities “until the closing of the Restructuring Agreement.” However, the timing of the closing of the Restructuring Agreement is somewhat uncertain and could be impacted by several factors, including a possible appeal of the Court’s ruling.
Another, more specific question on the minds of many ELNY annuity owners is: what can we still do to protect our interests in connection with the approximately 1,500 ELNY annuities that will have shortfalls (meaning less than the full amount of the annuity payments will be covered under the Restructuring Agreement), and when do we need to do it? One major issue in this regard is Schedule 1.15 to the Restructuring Agreement, which sets forth in detail the amount of benefits that the Restructuring Agreement will allocate to each of the ELNY annuities, and the amount of the shortfalls on which annuity owners are exposed. The Superintendent filed the current version of Schedule 1.15 in November 2011, but a revised version is forthcoming. To the extent annuity owners understand the amount to which they are entitled under the various guaranty association acts, annuity owners can compare that amount with the amount of the benefits allocated under the Restructuring Agreement. We have performed this analysis for a number of annuity owners, as well as the related analysis of how exposure on any shortfalls my be reduced or eliminated.©2014 Drinker Biddle & Reath LLP. All Rights Reserved