JUST what is going on at R&Q Insurance Holdings, the Londonlisted group which has been giving its investors more than the odd palpitation in recent months?

The company, formed in 1991 as Randall & Quilter, has seen its shares nosedive by more than 90 per cent during the last 12 months amid concerns about its viability. Last October, it announced the $465m sale of its Accredited division to Onex Corporation, the Canadian investor - a deal designed to shore up its balance sheet. Much of the proceeds of the sale, however, appear to be earmarked for purposes other than paying down its debt pile.

Now, I hear that Dan Schwarzmann (pictured), the PricewaterhouseCoopers partner best known for his role in winding down the European operations of Lehman Brothers, has been drafted into undertake contingency planning for R&Q's insolvency should the deal not get approved.

"R&Q remains in constructive discussions with its lenders and regulators regarding the approval of its sale of Accredited," a spokesman for the insurer said. "Any suggestion otherwise is incorrect."

People close to the company acknowledge, though, that a warning in its deal circular that without shareholder and lender approval the company would face ongoing concern challenges remains valid.

One said R&Q's board remained confident that both sets of stakeholders would approve the deal, and that in any case, an insolvency event would be a Light Touch Provisional Liquidation under Bermuda law.

"Under a Provisional Liquidation (PL), they will essentially be restructuring the company with the expectation of exiting this structure in the future," said one Source.

There remain, though, myriad questions about the company's governance, as well as the future of its legacy arm, which market sources say is now drawing interest from potential bidders. Expect developments in the coming weeks.

(c) 2024 City A.M., source Newspaper