Court petitioned to supervise Clover liquidation

The voluntary liquidators of Clover Investment Advisors, the firm formerly owned by jailed asset manager Eric St-Cyr, have filed a petition for court supervision of the liquidation.

In the filing, the voluntary liquidators Fund Solution Services Ltd. state that although considerable progress has been made investigating the affairs of the company and helping investors transfer their accounts to new service providers, the assets held by Clover are unlikely to be sufficient to complete the liquidation.

Because Clover is expected to become insolvent, Fund Solution Services petitions to continue the liquidation under the supervision of the court as official liquidators.

According to the filing, the sole registered shareholder placed the company into voluntary liquidation with a written resolution dated March 21 and Fund Solution Services was appointed as liquidators on April 8.

On April 15, the shareholder signed a declaration of solvency stating that the company would be able to pay its debt in full with interest within 12 months, the filing states. In an email to the Cayman Compass the liquidators confirmed that St-Cyr was the sole registered shareholder of the company.

Andrew Childe of Fund Solutions Services said a nominee services provider to the sole shareholder used its role as nominee to appoint a voluntary liquidator to Clover. This empowered the voluntary liquidator to immediately step in and take the actions necessary to protect the interests of the company’s clients, including the removal of St-Cyr and securing the company’s assets, he explained.

Once these immediate steps were taken, Fund Solution Services Ltd. was mandated to oversee the winding down of the Clover Investment Advisors.

The liquidators are now petitioning the court to be assigned the power to carry on the business of the company as far as necessary for the winding up, in particular the power to facilitate the proper exit of clients from their investments, whether by transferring their accounts to a third party adviser or by reimbursing them in cash.

The liquidators are further asking the court for the power to engage existing staff, attorneys and a third party investment manager to assist in the liquidation.

St-Cyr was arrested in March in Florida and charged with money laundering offenses following a sting operation by IRS undercover investigators. In October, he was sentenced to 14 months in prison and three years of supervised release.

In 2013, St-Cyr had also launched TraderOffshore, a brokerage firm owned by Offshore Capital Ltd. However, this company is not part of the liquidation.

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