Those with deposits of $20K or less to get 100 percent
The creditors of Caledonian Bank Ltd., which went into liquidation in February, will receive dividend payments, in some cases representing the full amount of their deposit.
The Cayman Islands Monetary Authority placed Caledonian Bank, as well as its sister company, Caledonian Securities, in controllership on Feb. 10, just days after the U.S. Securities and Exchange Commission filed a lawsuit against the bank. The Grand Court subsequently ordered the winding up of the two companies on Feb. 23.
The joint official liquidators, Keiran Hutchinson and Claire Lobell of Ernst & Young, issued a circular to creditors on July 29 giving an update on the forthcoming payments, which will be segmented into two types.
For those registered creditors whose total deposits did not exceed $20,000, they will receive a “preferential dividend” equivalent to 100 percent of their admitted claim, pursuant to section 141 and Schedule 2 of Cayman’s Companies Law.
Those with total deposits exceeding $20,000 will receive a first interim dividend equivalent to 75 percent of their admitted claim, considerably higher than the 45 percent to 50 percent figure the joint official liquidators first estimated.
“[This is] due to a range of factors, including that no material unexpected claims have been filed/submitted against [Caledonian Bank Ltd.]; the majority of [Caledonian Bank Ltd.] bond portfolio has been successfully realized and the proceeds of realization remitted to accounts controlled by the [joint official liquidators] in the Cayman Islands; some successful early recoveries of loans; the Court’s directions in relation to the preferential dividend; and the outcome of consultation with the liquidation committee,” the circular stated. Particulars on future interim dividends will be provided to creditors in August, it added. Payments will be made by wire transfer.
“[The joint official liquidators] have requested that creditors provide wire details and bank account information to where the dividend is to be remitted,” the circular stated. “If creditors have not provided this information to date, the [joint official liquidators] request that you do so as soon as possible.”
On Feb. 6, the U.S. Securities and Exchange Commission filed a lawsuit against Caledonian Bank and Caledonian Securities and three other broker-dealers in Belize and Panama in connection with sham stock offerings and penny stock pump-and-dump schemes that allegedly netted the orchestrators of the fraud US$75 million.
The SEC put a “freeze” order on $76 million of Caledonian Bank’s U.S. assets when it filed the lawsuit, an act that was subsequently called an “incredible government overreach” by a U.S. District Court judge. The freezing order directly resulted in a run on the bank and its ultimate bankruptcy, something the SEC’s lawyer admitted.