The Tribune

By NEIL HARTNELL

Tribune Business Editor

CLICO (Bahamas) liquidator has blasted the information demand served on himself by the insolvent insurer's Trinidad affiliate, as "harassment", describing it as "utterly meritless" and a "blatant effort to circumvent" Bahamian court proceedings.

Documents filed in the US Bankruptcy Court for south Florida on June 22, which have been obtained by Tribune Business, disclose that Craig A. 'Tony' Gomez, the Baker Tilly Gomez accountant and partner, is seeking an Order barring CLICO Insurance Company (Trinidad) from the examination and document discovery it is seeking in relation to its $52 million claim against CLICO Enterprises.

The latter is the wholly-owned, Bahamian domiciled subsidiary of CLICO (Bahamas), and Mr Gomez and his US attorneys are arguing that CLICO (Trinidad) should be making its demands in the Bahamian court system - where CLICO Enterprises is being liquidated - rather than in the US.

The US is the forum for the liquidation of Wellington Preserve, the Florida-based real estate project in which CLICO Enterprises invested $73 million on CLICO (Bahamas) behalf, and Mr Gomez is alleging that allowing the Trinidadian discovery request would only result in increased costs - reducing recovery for the Bahamian insurer's policyholders and creditors.

The documents also disclose that Mr Gomez has not accepted, and is disputing, CLICO (Trinidad's) claim to be a CLICO Enterprises creditor.

And, to date, some $23 million has been realised from real estate sales at Wellington Preserve, some $10 million of which has come back to the Bahamas for the ultimate benefit of CLICO (Bahamas) creditors. That $23 million is equivalent to 41.8 per cent of the property's purchase price.

Setting out their case, and in a bid to recover costs associated with defending CLICO (Trinidad's) demand, Mr Gomez and his attorneys said they were seeking sanctions against it "by reason of its blatant effort to circumvent an existing case in which it is involved in the Bahamas, through seeking discovery - to which it is not entitled to - in this case".

They are also seeking a US court Order for "reimbursement of fees and costs by reason of CLICO (Trinidad's) utterly meritless effort". Mr Gomez also pointed out that his attorneys, Callender's & Co, via a May 25, 2012, letter, had notified CLICO (Trinidad's) US legal counsel that claims in CLICO Enterprises' liquidation had been requested in relation to the latter's winding-up in the Bahamian Supreme Court.

Noting that less than two weeks later CLICO (Trinidad) filed its discovery demands in the US, Mr Gomez and his attorneys are alleging that it has "no claim" in the Wellington Preserve liquidation, and should instead be putting its issues before the Bahamas' Supreme Court.

Recalling the background to the dispute, the CLICO (Bahamas) liquidator described CLICO Enterprises as the vehicle through which the former carried out all its non-insurance business, its assets including 100 per cent ownership of Wellington Preserve.

"Initially working from tax returns and other public documents, Gomez had developed the understanding that, in addition to its insurance business, CLICO (Bahamas) owned 100 per cent of another Bahamian company," the liquidator and his attorneys alleged.

"Generally speaking, the records of CLICO (Bahamas) reflect the capitalisation of CLICO Enterprises by CLICO (Bahamas) and loans made from CLICO (Bahamas) to CLICO Enterprises, the combination of which aggregated more than $80 million.

"Gomez's understanding of the beneficial ownership of CLICO Enterprises was challenged when the registered agent of CLICO Enterprises refused to acknowledge that CLICO (Bahamas) was the owner of the equity of CLICO Enterprises, despite the years of tax returns which had represented precisely that."

This prompted Mr Gomez to petition the Bahamian Supreme Court for CLICO Enterprises' liquidation, which was approved. In the meantime its main asset, Wellington Preserve, was placed into Chapter 11 bankruptcy protection in Florida, with its reorganisation plan - allowing for all minor creditors to be paid off first, the remaining balance going to CLICO Enterprises - approved.

Noting that Wellington Preserve owned some 545 acres when Chapter 11 was filed, part of an original 640-acre tract acquired for $55 million in 2005, Mr Gomez and his attorneys said: "So far, about 241 acres have been sold, for a gross sum in excess of $23 million.

"That was sufficient to pay all unaffiliated creditors in full, and to pay an initial $10 million dividend to CLICO Enterprises."

Describing CLICO (Trinidad's) discovery request as "belated", they pointed out that it was not a creditor of Wellington Preserve, but of CLICO (Bahamas).

"CLICO Enterprises' contact with the United States was its capitalisation of, and lending to, among others, Wellington; all Wellington's issues have been resolved through this Chapter 11 case," Mr Gomez and his attorneys alleged.

"Now, after years of silence (and, we would suggest, active avoidance), CLICO (Trinidad) has served several subpoenas for broad-based discovery from CLICO (Bahamas) and CLICO Enterprises."

They added that none of this impacted Wellington Preserve, as it already had a confirmed liquidation plan, "a 100 per cent payout to all unaffiliated creditors and an initial $10 million distribution to the estate of CLICO Enterprises, in the Bahamas, thus far".

Warning that allowing CLICO (Trinidad's) request would only prolong the Wellington Preserve liquidation and "impose direct costs" on the process, further reducing recovery for Bahamian creditors, the court documents said all the requests should be directed to CLICO Enterprises' liquidation in the Bahamas.

"At best, it has a potential claim against the estate of CLICO Enterprises in the Bahamas, nothing more," Mr Gomez and his attorneys said of CLICO (Trinidad).

"There is nothing in this case at this late date that concerns CLICO Enterprises, other than the fact that the Bahamian CLICO Enterprises liquidation case has received, and should continue to receive, significant funds from the liquidation of Wellington.

"Quite simply, we submit that CLICO (Trinidad), as a potential creditor of CLICO Enterprises, and not of [Wellington Preserve], lacks any protectable interest or financial stake in the outcome of this case.

"Moreover, the belated effort to obtain discovery here is both inappropriate and harassing, as well as seeking information that CLICO (Trinidad) should be requesting in the case in which it is actually a participant - the CLICO Enterprises liquidation in the Bahamas."