Lloyd's refuseniks to continue battle in court

Rebel Lloyd's names who refused to sign up to the market's pounds 3.2bn rescue plan said yesterday they were to set up anorganisation which was expected to continue the fight in the courts.

The United Names Organisation is to hold its inaugural meeting in London on Thursday, and founder members claimed it was likely to attract a "core membership" of 2,500. Leaders of Lloyd's rebel groups in the US and Canada are expected to attend.

The formation of the new group is the first public confirmation that the Lloyd's refuseniks, as some describe themselves, are likely to continue the war despite losing the biggest battle.

Earlier this month, Lloyd's reached acceptance levels of more than 94 per cent of its 34,000 names for the reconstruction and renewal plan. More than 1,800 members refused to sign.

Sir William Jaffray, one of the founders of the new grouping, made clear that plans were being prepared to accuse Lloyd's in court of fraud over the pounds 8bn of losses the market ran up.

He said: "We have the resources across the board to fight to the bitter end. It will be real financial power going after Lloyd's."

He would not be drawn on whether the organisation planned to take the initiative and sue Lloyd's for fraud.

The alternative is to wait for Lloyd's to sue names who have refused to sign up for the rescue plan, for recovery of their debts.

Fraud would then be used as a defence against Lloyd's claims for the unpaid money, which could run into hundreds of millions of pounds.

Catherine Mackenzie-Smith, joint chairwoman of the new organisation , said it did not matter which side started the case because "it comes to the same thing in the end".

Sir William claimed that 5,000 of the Lloyd's names who had accepted the rescue offer had put conditions into their acceptance letters and he hoped this category of names would join the organisation. A Lloyd's spokesman said the claim was "rubbish," because no conditional acceptances had been counted.

A separate organisation called Friends of United Names is being set up to accept donations from Lloyd's names who joined the rescue plan but want to encourage the rebel names to fight on.

Sir William, a property consultant, also said a new foundation was being established to campaign against fraud of all types, anywhere in the world, and he hoped it would win endowments worth "hundreds of millions".