In our last quarterly update we detailed the events leading up to the liquidation of Caledonian Bank Limited (In Official Liquidation) (the “Bank”) and Caledonian Securities Limited (In Official Liquidation) (“Securities”) and informed you that the Grand Court of the Cayman Islands had appointed Mr. Keiran Hutchison and Claire Loebell as Joint Official Liquidators of the Bank and Securities (the “JOLs”).
The first meeting of creditors for the Bank took place on 16 April 2015 whilst the meeting of creditors for Securities took place on 17 April 2015, both of which were held at the Marriott Hotel in the Cayman Islands at 10:00 am on the relevant day. Attendance by the creditors was relatively high and the JOLs were asked numerous (sometimes difficult) questions regarding the events leading up to the liquidation, how quickly the liquidation with the SEC could be resolved and, perhaps more importantly, how quickly and to what extent would deposit holders see a return of their deposits. Stuarts attended both meetings and have since been corresponding with the JOLs to ensure our clients’ claims relating to both the Bank and Securities are properly recorded and to ensure our clients were represented at those meetings. We also provided our clients with regular updates on the process and any developments.
The JOLs have now confirmed that each deposit holder with the Bank (other than those excluded pursuant to the provisions of the Companies Act (2013 Revision)) will shortly receive their priority return of up to KYD20,000 by way of an interim dividend. All deposit holders are required to undergo new KYC identification checks before the JOLs will pay out any such sums. Any balance payable to deposit holders (or such proportion thereof as the available assets permit) will then be paid out as and when liquidity allows or otherwise at the completion of the liquidation.
The initial report from the JOLs as to the financial state of each of the Bank and Securities has confirmed that, had the Bank’s assets not been frozen in the US in connection with the SEC and the claim of $76 million not been provided for in full, the Bank would have been in a good financial position. The value of assets subject to the freezing order in the US has now been reduced to $7 million from the original $76 million and so most commentators expect the litigation with the SEC to settle for approximately the same figure. This should mean that the depositors receive a relatively high proportion of their deposits back although this is only speculation and it remains to be seen how high the costs of the liquidation will ultimately prove to be.
In addition, there is some good news for those who held custody accounts with Securities as, subject to a final approval of the Grand Court, the JOLs have confirmed their intention is to simply return those custody assets to account holders.
Please contact us if you are a depositor with the Bank or Securities or would like us to keep you informed of any developments.
Chris Humphries