BCCI COURT CASE Creditors expect court to approve deal
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This is a digitised version of an article from The Cayman Compass's print archive. Occasionally, the digitisation process introduces transcription errors, or other problems.
See the article in its original context from December 1994.
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- Creditors of the collapsed Bank of Credit and Commerce International (BCCI) hope Britain's High Court will next week approve a settlement plan worth US$1.8 billion, sources close to the negotiations said on Friday.
The deal comes before the court on Monday, with a quick judgement expected.
Creditor committees in Britain, Luxembourg and the Cayman Islands -- the three places where BCCI was registered -- in October agreed to the proposed deal under which Abu Dhabi, BCCI's majority shareholder, would pay creditors $1.8 billion. "It's considered likely the (British) judge will give a ruling at the end of the day or perhaps early the next morning," said one source close to the Abu Dhabi shareholders.
BCCI, which once had assets of $24 billion and operations in 71 countries, was closed down by central banking authorities in July 1991 after discovery of massive fraud. Some 250,000 creditors worldwide have since been trying to win compensation for losses estimated at more than $10 billion.
Courts in the three jurisdictions must approve the current deal before it can go ahead.
A source close to the creditors said that providing there was no opposition, the case was likely to go through the British High Court very quickly.
"The vice-chancellor (Sir Richard Scott, a High Court judge) understands the whole BCCI saga ex"tremely well," the source said, adding it was usual procedure for Luxembourg courts to take more time to reach a final decision. Luxembourg's district court, which threw out a $1.7 billion deal last year, held hearings on 30 November and 1 December and will decide on 12 January, 1995 whether to approve the settlement.
A Cayman Islands court will also hear the case on 12 January, 1995.
During the Luxembourg hearing, briefs were entered objecting to the deal and pleas on behalf of former BCCI employees, directors and auditors were formally noted. This time round, though, the main creditor groups are not objecting. Earlier this month, Tony Scott of the British-based BCCI Depositors Protection Association (DPA) said the decision of the London court would likely pave the way for the others.
Under the terms of the $1.8 billion deal, Abu Dhabi would pay $1.55 billion immediately after court approval, $150 million 24 months later and $100 million 12 months after that.
Meanwhile, there has been no formal announcement yet on an out-of-court deal being struck between BCCI liquidators and Saudi Arabia's National Commercial Bank (NCB) and its former chief operating officer Sheikh Khalid Bin Mahfouz.
The deal is said to involve NCB and Mahfouz paying $245 million in cash in return for dropping their own $600 million claim against BCCI.
