Spectrum Syndicate Management is piloting the first scheme of arrangement facility in Lloyd's in conjunction with PricewaterhouseCoopers (PWC) and legal firm Clyde & Co.
The pilot is with Syndicate 1121, which is in run-off for open years 1998/1999/2000, though Spectrum has plans to roll out the schemes facility across Lloyd's.
Spectrum managing director Richard Murphy said: "We are testing the concept at the moment, with PWC acting as scheme adviser and Clyde & Co acting as the legal adviser.
"There has not really been a market for schemes at Lloyd's before. We have written to all the Names (on Syndicate 1121) and they have been very supportive."
Scheme of arrangement, or schemes, have been used more extensively in recent years to deal with the unique issues arising in connection with insolvent insurance or reinsurance companies. It is effectively a 'deal' between a company and its creditors.
PWC partner Dan Schwarzmann is working with Spectrum on the facility. He said schemes was a "growing area of expansion" for PWC in general.
Murphy, who is the run-off manager of 1121, added that when the company went to the open market to get quotes to close the syndicate, the estimate was £115m. "Under the scheme arrangement our forecast is £80m, which is good for the creditors."
Spectrum chairman John Winter said that schemes had often been regarded as controversial by large corporations such as Lloyd's.
"Lloyd's and other blue chip companies often feel schemes are bad for their reputation because creditors believe they won't always be paid in full. We guarantee that all creditors will be paid in full."
A Lloyd's spokeswoman said: "We are supportive of any alternative means of closure of open years. But we can't discuss specifics on market and corporation issues."