In a dramatic financial unraveling, Northeast Insurance Co., a captive insurer for several major New York hospitals and a prominent Jewish nonprofit, has filed for Chapter 15 bankruptcy protection in New York, seeking U.S. recognition of its Bermuda liquidation. The insurer says a flood of claims under the state’s Child Victims Act (CVA) pushed it into insolvency.

Filed Wednesday, the company’s plea outlines how 55 claims tied to decades-old child sexual abuse allegations left its balance sheet deeply underwater. The CVA — enacted in 2019 to extend the statute of limitations for childhood abuse survivors — opened the legal floodgates, exposing the insurer to massive unforeseen liabilities.

Hospitals and Nonprofits Caught in the Fallout

Northeast Insurance was originally formed to serve as a risk-sharing shield for its member institutions, including Mount Sinai Medical Center, Maimonides Medical Center, Montefiore Medical Center, Beth Israel Medical Center, CenterLight Health System Inc., and the UJA/Federation of Jewish Philanthropies of New York, among others.

According to Mark Allitt, the court-appointed joint provisional liquidator and foreign representative, Northeast stopped writing new insurance policies at the end of 2017. At that time, it believed its reserves were more than sufficient to meet all obligations.

But the passage of the Child Victims Act two years later changed everything.

“The [Child Victims Act] claims were unforeseeable at the time of cessation of writing new policies and, therefore, no corresponding reserves were funded at that time,” Allitt explained in his declaration.

Bermuda Liquidation and U.S. Court Proceedings

On October 7, Northeast filed for liquidation in Bermuda after its liabilities officially outstripped its assets. Two days later, Bermuda’s Supreme Court appointed joint provisional liquidators to oversee the process, aimed at preserving assets and ensuring equitable treatment for creditors.

Seeking cross-border coordination, Northeast turned to the U.S. Bankruptcy Court for the Southern District of New York under Chapter 15, which governs foreign insolvency proceedings. The case was assigned to Judge Michael E. Wiles, who scheduled a recognition hearing for November 13.

Allitt said the Bermuda proceeding allows the company to invoke an automatic stay under Bermuda law — effectively freezing litigation and shielding assets while the wind-down process unfolds.

Legal Counsel and Next Steps

The foreign representative in the case is represented by Glenn S. Walter of Honigman LLP. Representatives for the hospitals, the UJA Federation, and other stakeholders have not yet commented on the filings.

If the New York court grants recognition, it will strengthen the Bermuda liquidation’s legal standing in the U.S., ensuring that creditors and claimants adhere to a unified, court-supervised process.

The Northeast Insurance Child Abuse bankruptcy marks one of the most significant financial aftershocks of the Child Victims Act, underscoring how a single change in state law can send ripples across international financial and legal systems.