Bringing relief to creditors after a two-year saga, Avata Property Services on Tuesday announced the $3.8 million sale of Caledonian House, former headquarters of the bankrupt Caledonian Bank Ltd.
The sale on Aug. 25 will contribute to long-awaited payouts to hundreds of creditors caught out by the bank’s closure in February 2015 in the wake of a Securities and Exchange Commission lawsuit in New York. The suit was concerned with the unregistered sale of securities and penny stock pump-and-dump schemes, which allegedly netted the perpetrators US$75 million.
Avata consultant Matt King said Tuesday that the 17,000-square-foot, three-story office block was sold to a partnership of insurance specialist Kensington Management Group and Southern Property Services Ltd., an affiliate of Stuarts Walker Hersant Humphries law firm.
“Both companies are already based in Cayman,” Mr. King said, “and have continued their commitment to the central George Town area with this long-term investment into new business premises.”
Kensington Executive Vice President Keith Carter declined to comment on the sale price or its allocation between the partners, but said both planned to move into the building. “We’ll take two floors and Stuarts will get the top,” he said. “Kensington is looking at Easter time next year, 2018.”
He was unable to say when renovations might begin or the likely cost.
“The whole thing has just closed, but it’s imminent. We can’t wait till next year to start,” he said, noting that in autumn was likely.
The two companies had been looking at the premises since the beginning of this year, Mr. Carter said.
Mr. King said negotiations had taken between two months and three months.
Stuarts Managing Director Chris Humphries declined to comment on the sale, saying the firm “wasn’t ready to publish” details, but said “it might be good for Caledonian liquidators coming to an end and creditors will get final payment.”
Mr. King said Avata had listed the property in March/April last year and agreed a sale within a year effectively. This is half the time that the last few commercial sales in George Town have occurred in,” a timetable he pegged to “our professional advice.”
The building, described by Mr. King as “good grade B [office] space,” was sold as part of efforts by Caledonian liquidators Ernst & Young to dispose of the bankrupt firm’s assets.
Other parties were interested in the property, including a hotel, residential on the upper floors and retail uses on the ground floor, Mr. King said.
Kensington’s Mr. Carter said the company, housed in downtown’s Genesis Building since its founding in 1999, bought the space because “we are a growing company and are outgrowing our premises, so we’ll move.”
He said the Caledonian Building matched the insurance management company’s requirements: “There isn’t an awful lot of space for sale that is big enough,” he said.
In the wake of the February 2015 SEC action, Caledonian’s approximately 1,550 customers with nearly 1,900 active accounts sought to withdraw US$68 million in a massive bank run, forcing Caledonian to suspend operations.
The Cayman Islands Monetary Authority appointed controllers four days after the SEC lawsuit, alleging that the bank and its Caledonian Securities affiliate – and three offshore broker-dealers – had sold unregistered, restricted shares as part of a penny stock fraud scheme.