The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Chief Justice has allowed ArawakX’s principals “to maintain conduct and control” of the legal battle with Bank of The Bahamas over the latter’s six-month freezing of all their accounts.

Sir Ian Winder, in a November 14, 2023, Order has permitted D’Arcy Rahming, ArawakX’s president, and his son, DArcy junior, to stay in charge of the litigation launched against the BISX-listed institution despite appointing provisional liquidators to take control of virtually all other aspects of the crowd-funding platform’s affairs.

The Order, which has been seen by Tribune Business, allows ArawakX’s directors, namely the Rahmings, “to maintain conduct and control on behalf of the company of [the] Supreme Court action between the company and Bank of The Bahamas”.

While Ed Rahming, founder and managing director of Intelisys (Bahamas), and Cheryl Simms, the Kikivarakis & Co accountant, in their capacities as provisional liquidators will take control of all the books and corporate records belonging to The Bahamas’ first ever crowd-funding platform, the Rahmings have also been given permission to appeal the duo’s appointment if they so desire.

And they are also free to launch further legal proceedings against the Securities Commission, which successfully petitioned the Supreme Court for the provisional liquidators’ appointment. However, there is a ‘catch’ in that the Rahmings will have to bear the costs of all such litigation and appeals “personally and not out of the assets and undertaking of the company”.

Tribune Business sources yesterday confirmed that the Securities Commission and provisional liquidators were quite happy to allow the Rahmings to retain carriage of the Bank of The Bahamas claim given that they will have to pay all legal costs and expenses. As a result, there is no risk or liability exposure for any other party, and the matter is effectively viewed as a non-concession.

ArawakX, prior to the provisional liquidation, was seeking damages from Bank of The Bahamas for breach of contract, injury to its credit and reputation and alleged “unlawful interference” with its business relationships, plus aggravated damages. No dollar figure, though, is specified in the statement of claim.

Bank of The Bahamas froze ArawakX’s bank accounts from November 1, 2022, to mid-May 2023 amid uncertainty over who held control and signatory authority over them - the Rahmings or James Campbell, the former Colina Insurance Company president who was the platform’s largest $1.6m investor, amid their battle for control. The freeze was done to prevent the bank from exposure to potential liability from either party.

Mr Rahming junior, in a November 8 affidavit, argued it was “axiomatic”, or unquestionable, that Bank of The Bahamas “will have to answer for the harm caused” in freezing ArawakX’s bank accounts. He said it had “cynically” denied to the Securities Commission that the two parties were in settlement talks knowing this would strengthen the regulator’s case for the winding-up.

The Supreme Court’s appointment of a provisional liquidator, Mr Rahming added, would benefit Bank of The Bahamas because there was no guarantee that the crowd-funding platform’s legal claim against it would survive. However, Christina Rolle, the Securities Commission’s executive director, has previously reassured that a provisional liquidator would be mandated to pursue all such cases.

Nevertheless, Mr Rahming alleged that the regulator, through asking Bank of The Bahamas to confirm if it was in settlement negotiations, had sparked the BISX-listed institution’s “abrupt and calculated rejection” of ArawakX’s $33m settlement demand.

He also produced a September 7, 2023, e-mail from Michelle Deveaux, an attorney with McKinney, Bancroft & Hughes, in which she promised to send a settlement proposal on Bank of The Bahamas’ behalf as evidence the latter was seeking to negotiate a resolution to the Arawak dispute.

Khalil Parker KC, the Bahamas Bar Association’s president, in a September 15, 2023, letter set out ArawakX’s “position on settlement” in response to what he said was Bank of The Bahamas’ request. He argued that the account freeze, which stemmed from the Rahmings’ battle for control with the platform’s largest investor, James Campbell, had disrupted a $49.8m project to develop a government savings bond.

As a result of this, and other impacts, Mr Parker said his client was prepared to accept a $32.977m settlement plus legal costs of $824,426 and VAT levied on the latter sum. “As the defendant was at all material times aware, its conduct complained of has resulted in loss and damage to the claimant’s standing with its regulator and an interruption of the claimant’s use and enjoyment of its market place and clearing facility licence,” he wrote on ArawakX’s behalf.

“The claimant at all material times had commenced a project pursuant to a signed proposal with the Government of The Bahamas worth upwards of $49.8m, which the defendant’s conduct complained of herein frustrated, causing loss and damage to the claimant.

“The defendant’s conduct also damaged the claimant’s relationship with its creditors, whose claims it was prevented from satisfying, and has exposed it to claims from its third-party subscribers. The claimant suffered a seven-month loss of earnings, reflecting $560,159 in subscriptions and other income, and $4.182m in success fees,” Mr Parker continued.

“The claimant also seeks $420,000 with respect to the aggravated nature of the injuries caused in the circumstances. The claimant is prepared at present to accept $32.977m and $824,426 plus VAT with respect to its costs of and occasioned by this matter in full and final settlement.” Mr Parker added that the account freeze had also impacted ArawakX’s credit and reputation, plus interfered with its business relationships.

It is unclear how the $32.977m figure was derived, although a large chunk is likely related to loss of opportunity concerning the $49.8m government savings bond development. However, Simon Wilson, the Ministry of Finance’s financial secretary, previously said talks with ArawakX had not progressed beyond the “proposal” stage and there was no binding agreement or contract between the two sides.

But Neil Strachan, Bank of The Bahamas’ managing director, told Ms Rolle in an October 25, 2023, e-mail that no settlement had been agreed with the embattled crowd-funding platform as the latter’s offer was previously “rejected”.

“This is to formally advise that Bank of The Bahamas has not engaged in any negotiations of settlement terms, nor have we agreed to a settlement relative to MDollaz/ArawakX. An offer for settlement was sent to our attorneys. However, the offer was rejected,” he wrote.