On June 10, 2026, Connecticut Healthcare Insurance Company (CHIC), Prospect Medical Holdings’ Cayman Islands captive insurer, obtained Chapter 15 recognition of its Cayman winding-up proceeding in the Northern District of Texas. The order protects CHIC and its U.S. property, while expressly declining to extend its stay to Prospect’s Chapter 11 debtors or CHIC’s insurers and reinsurers. Personal-injury plaintiffs’ rights against other parties remain subject to further court orders and the permissions in Prospect’s confirmed plan, stipulations, and other orders. Recognition order, pp. 4–6
The ruling separates recognition of the captive’s liquidation from protection for other participants in its insurance arrangements. This account examines the June 10 order and the filings leading to it; later settlement approvals and creditor distributions are not established by the reviewed evidence.
The foreign proceeding is before the Grand Court of the Cayman Islands, Financial Services Division, in Cause FSD 93 of 2026 (JAJ). Pearson declaration, pp. 1–2
Why the captive entered liquidation
According to Michael Pearson’s initial declaration, CHIC is owned by Prospect ECHN, Inc., an indirect wholly owned subsidiary of Prospect Medical Holdings. CHIC provided professional and general liability coverage to Prospect entities above applicable self-insured retentions, with that coverage fully reinsured by third parties. Pearson declaration, pp. 3–4
Pearson attributed CHIC’s insolvency pressure to Prospect’s inability to investigate, administer, and defend claims following its bankruptcy, while some reinsurance contracts independently required CHIC to investigate or defend claims. He reported approximately $2.1 million of available capital in CHIC’s unaudited financial statement dated February 28, 2026. That figure represents reported available capital, rather than an established total-asset valuation. Pearson declaration, pp. 4–6
Pearson reported that CHIC filed its Cayman winding-up petition on March 12, 2026, and that he and Orla O’Regan were appointed joint provisional liquidators on March 18. Pearson declaration, pp. 1–2, 5
A notice of filing the Cayman winding-up order was filed in the Texas case on June 1. Winding-up order notice
Claimants challenged recognition and requested relief
The Ad Hoc Committee of Medical Malpractice Claimants objected on June 2, opposing recognition and relief that it argued would impair victims’ access to insurance proceeds. Those assertions were the committee’s position, rather than findings by the court. Claimants’ objection, pp. 1–3
After a June 9 evidentiary hearing, the court signed and entered the recognition order on June 10. It found that the Cayman Islands were CHIC’s center of main interests, recognized the Cayman proceeding as a foreign main proceeding, and recognized Pearson and O’Regan as foreign representatives. Recognition order, pp. 1, 3–4
What the recognition order grants and reserves
Issue
Treatment in the June 10 order
CHIC and its U.S. property
Receive the protections of section 1520, including the automatic stay.
Foreign representatives
Are recognized and authorized to administer CHIC’s U.S. assets and gather evidence concerning its affairs.
Prospect debtors, insurers, and reinsurers
Do not receive an extension of CHIC’s stay under this order.
Related settlement
The order expressly does not approve the settlement then pending in Prospect’s Chapter 11 case.
Scope of the June 10 Recognition Order
The order grants recognition and asset-administration authority while expressly limiting the stay’s reach. Recognition order, pp. 3–6
Paragraph 12 reserves personal-injury plaintiffs’ permitted rights against parties other than CHIC under the Prospect plan, stipulations, or orders, subject to further court orders. Paragraph 13 expressly states that the recognition order does not approve the settlement pending in Prospect case 25-80002 at ECF 5082. Recognition order, p. 6
The order also reserves the parties’ rights and objections concerning future relief. The June ruling established the foreign representatives’ U.S. authority; completion of the proposed settlement and creditor recoveries remain unverified in the reviewed evidence. Recognition order, p. 6
Sources
Recognition order, pp. 4–6 /documents/e953cb95-72dc-4fbd-bbda-f2fccdc3964a/
Chapter 15 petition, pp. 1–4 /documents/19c93234-800d-4e06-ab98-cb9724d0c15f/
Pearson declaration, pp. 1–2 /documents/e9dec433-3e07-47d1-b84b-81d9b95da6ae/
Winding-up order notice /documents/45c01b22-e4bb-4a02-b856-9344f290a585/
Claimants’ objection, pp. 1–3 /documents/d293fc1d-dc3f-4f6b-bf89-8d5bf7980514/
This article was researched and written with AI assistance, using court filings, public records, and news sources. AI-generated content can contain errors. Verify all information against primary sources before relying on it. This is not legal or financial advice. See the disclaimer.