Some Caledonian depositors still waiting for bank payout

Caledonian Bank Ltd.’s liquidators are calling for patience as depositors ask where their money is more than a week after payments began to filter out, according to a letter sent to depositors. 

Caledonian had almost 1,300 depositors in early February when the U.S. Securities and Exchange Commission accused the bank and its sister company, Caledonian Securities, and three broker-dealers of selling unregistered securities as part of a sham stock offering and a penny stock pump-and-dump scheme, according to court documents. 

The bank filed for bankruptcy in February, saying an SEC freeze on many of its assets caused a run on its deposits. It was placed in the hands of joint liquidators Keiran Hutchison and Claire Lobell of Ernst & Young to dismantle the bank and its associated companies. 

In last week’s letter to creditors, Mr. Hutchison wrote, “We are addressing all information and enquiries but in this regard do ask for depositors to remain patient as both the Caledonian employees and the liquidators team now have a significant volume of information to process. As previously advised going forward, as depositors become KYC [Know Your Customer] and wire compliant, I intend to continue remitting dividends on a rolling, weekly basis. 

“I commenced dividend distributions on 30 July 2015. As was referenced in my circular of July 29, this was the commencement of the process but did not mean that all depositors would receive payment immediately as at that point in time a large number of depositors had not provided KYC information and a majority of depositors had not provided payment remittance information.” 

The first payments went out on July 30 to depositors who had less than $20,000 with the bank. Those depositors will get their money back in full. 

Other depositors are waiting for a first interim payment. Those larger depositors can expect to receive 75 cents on the dollar in the first payment, according to the July 29 letter from the liquidators to depositors. 

A Grand Court ruling last month by Chief Justice Anthony Smellie sided with creditors in a dispute with the liquidators, interpreting a section of the Companies Law to ensure that depositors with less than $20,000 are paid in full, as part of the priority payments. The bank owes $20,000 or less to 675 depositors. 

On Feb. 6, the SEC alleged that shares in four shell companies were subject to bogus registration statements that purported the stock had been sold to public shareholders in Serbia, Mexico, Ireland, Norway, Panama and Jamaica. 

The SEC court filings say Caledonian and its co-defendants allegedly netted more than US$75 million in the scheme. The U.S. regulator also accused them of using offshore shareholders to conceal the true ownership of the securities. 

The SEC filed a lawsuit in New York against Caledonian Bank Ltd., Caledonian Securities Ltd., Clear Water Securities Inc., Legacy Global Markets S.A. and Verdmont Capital S.A. on Feb. 6. 

Caledonian House on Dr. Roy
Caledonian House on Dr. Roy’s Drive, George Town. – PHOTO: TANEOS RAMSAY


  1. The delay is being caused because the liquidators decided to refresh the KYC of the entire client base. This is TOTALLY UNNECESSARY and a massive waste of money. The liquidators asked for court approval to undertake this exercise but the court refused to bless it, undoubtedly because the court sees that there is no legal requirement for this. Virtually all clients are sending their money to other banks in recognized jurisdictions. Instead, the liquidators went forward with this and hired their affiliate in New York to send its staff to Cayman to undertake this boondoggle exercise at a cost of almost $2,000,000!

  2. As soon as lawyers and so on are involved the costs will escalate.

    I read somewhere that a firm in London called Trench Capital is willing to settle the claims early i.e. buy the claim I have.

    If anyone has any experience of this perhaps they can post it?