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Clico Bahamas seeks $365M from CL Financial

By Andre Bagoo Monday, October 31 2011

A CLAIM for $365 million has been served on CL Financial Limited in relation to a guarantee reportedly made by the local company to Clico (Bahamas) Limited.

In an official liquidator’s report, Clico (Bahamas) Limited liquidator Craig Gomez has confirmed that lawyers have served a statutory demand on CL Financial as a precursor to a debt recovery action.

“I have requested general counsel to actively pursue the enforceability of CL Financial’s US$58 million guarantee to Clico (Bahamas) Limited, ” Gomez notes in his eighth official report submitted this month to the Bahamas Supreme Court for the period April 1 to June 30. “I was subsequently advised that a statutory demand has to be made first before a debt recovery action could commence in Trinidad.”

“I have asked general counsel (Callenders & Co) to instruct the counsel in Trinidad to proceed with the statutory demand.

A statutory demand was served on CL Financial,” he said. He noted that new counsel was retained and instructed in the matter on June 27.

Money retained by Clico (Bahamas) is expected to be used in the ongoing process of paying policyholders and creditors at the Bahamas branch. Clico (Bahamas) Limited (previously known as British Fidelity Assurance Limited) operates branches in the Bahamas, Belize and the Turks and Caicos. Its parent company is Clico Holdings (Barbados) Limited, though the ultimate parent company is CL Financial Limited.

CL Financial chairman Gerald Yetming yesterday said he could not give details of the demand off hand.

Gomez notes that talks to see the transfer of policies of Clico (Bahamas) to a new insurance company continue. The tracking of assets considered to be the property of Clico (Bahamas) also continues to be a challenge, he said.

Gomez also confirmed reports that records have been subpoenaed from First Citizens Bank (FCB) and a US bank in relation to the question of payments made to an account held in Clico (Bahamas) Limited’s name in Trinidad and Tobago. The payments total $332 million (US$52.7 million).

“I have received documents from Clico Guyana and Clico Suriname representing claims amounting to US$34 million and US$18.7 million respectively,” Gomez says. “My preliminary review of the documentation suggests that valid insurance policies were never issued by the Clico (Bahamas).”

He continued, “the purported premiums received from both Guyana and Suriname were remitted directly to a bank account held in the name of the company at Ocean Bank, Miama Florida, United States and to another account held by the company in Trinidad at First Citizens Bank Limited.” In 2009, as the Clico meltdown unfolded throughout the region, Clico (Bahamas) Limited experienced cash flow problems.

Most notably it was unable to pay claims for a total $16.3 million (US$2.6 million) originating from the Turks and Caicos.

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