U.S. WITHDRAWS APPEAL IN RESERVE SUPERPRIORITY CASE

Chicago, IL - Illinois Director of Insurance Mark Boozell announced that the United States Department of Justice, on behalf of the United States government, has withdrawn its appeal in the Reserve Insurance Company "superpriority" case.

By dismissing its appeal, the United States has let stand the key priority ruling which Boozell had won from District Court Judge Reuben Castillo. Judge Castillo agreed with Boozell that claims brought by the federal government against the Reserve estate are subject to Illinois Receivership law, including claim filing deadlines, and are not entitled to superpriority ranking ahead of consumers' claims. Castillo also rejected the United States' contention that the statutory role of guaranty associations invalidated the priority provisions of the Illinois Insurance Code.

Boozell is now discussing with the Department of Justice a possible voluntary dismissal of his cross-appeal of other aspects of Judge Castillo's decision. If an agreement on the remaining issues can be reached, Boozell will move to dismiss his cross-appeal, ending the Reserve superpriority litigation, and allowing Boozell to close the Reserve estate and make a final distribution of the assets to Reserve's creditors.

Boozell is represented by attorneys Peter G. Gallanis and J. Kevin Baldwin of the Office of the Special Deputy Receiver in Chicago, and by Wm. Carlisle Herbert and Eric M. Phillips of Hopkins & Sutter.