August 05, 2014

From Tom Jones of McDermott, Will & Emery:

Good question since the terminology can be confusing. A little history will explain. For the past 20 years, rent-a-captives existed (mostly in Bermuda and Cayman) which are "normal" corporations contractually divided into subaccounts to wall off exposing assets of one "cell" from creditors of another. Then about 5 years ago Guernsey came up with the idea of passing a law which by statute legally segregates assets of one "cell" from creditors of another. The latter therefore is a special type of rent-a-captive now referred to as a "protected cell company" in Guernsey, a "segregated portfolio company" in Cayman and a "separate accounts company" or "private act company" in Bermuda. Generically, these companies operating under this type of special legislation are now called "cell companies."