Clico Investment Bank fails to stop $12m debt payout

The court-appointed liquidator for Clico Investment Bank (CIB) has been denied an application to expunge two proof of debt claims by the bank’s former president and one of its directors amounting to over $12 million.

In his decision, Justice Ronnie Boodoosingh said there was sufficient time for CIB’s liquidator Deposit Insurance Corporation (DIC) to verify the proofs and declined to have Richard Trotman and Lennox Archer’s applications expunged.

A proof-of-debt is the document on which a creditor submits details of a claim against an insolvent estate.

In its application, DIC asked the court to expunge the men’s proof-of-debt applications on the basis the admission of the debt by its validation team was erroneous.

Trotman was CIB’s president from 2007-2009 and its chief executive while Archer was a director from 1998-2007.

After the winding up of CIB, the liquidator was appointed in November 2011, and in response to an advertisement, Archer submitted his claim for $10.2 million in December 2011 while Trotman submitted his for $1.7 million the same time. Their claims were based on profit-sharing clauses in their contracts.

In January 2018, the court gave the DIC permission to make a distribution since DIC’s liquidation team reviewed and admitted both claims.

The money was put in a reserve account.

The liquidator then claimed the validation team did not make a connection between the parallel legal proceedings filed against former executives of CIB and the proof-of-debt applications. DIC said after receiving legal advice, the admission was erroneous and now wanted the proofs expunged.

DIC also said the proofs were allowed based on the presumed reliability of the 2007 audited financial statements of CIB, but the validation team overlooked the challenge of the 2007 CIB audited financial statements and the profits were “overstated.”

It also said CIB “was probably insolvent in 2007.”

In his ruling, Boodoosingh said there was more than enough time for the liquidator to verify the validity of the two men’s claims.

“There is no evidence before the court of any new information that came to light to cast doubt on the admission of the proofs in April 2018,” he added.

He also said there was no evidence, at this time, to show that the company was insolvent in 2007, and based on the timeline, any information relating to the profitability of the company would have been found before a decision was made to admit the proofs.

“At the end of the day there is one liquidator, although this is obviously a multifaceted and complex winding up,’ the judge pointed out as he held that the circumstances of the matter did not warrant the court to exercise its discretion to expunge the proofs.

He also ordered each party to bear their own legal costs.

Attorneys Ian Benjamin SC, and Elena Araujo represented the liquidator while Trotman represented himself and attorneys Nalini Sharma and Andrea Goddard represented Archer.