The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Liquidators for Gulf Union Bank (Bahamas) are predicting that depositors/creditors will recover “not less” than 45 per cent of what is owed to them, having reduced its insolvency by $5.836 million over the past 14 years.

As accountants Graham Garner and Raymond Winder prepare to make another distribution to hundreds of Gulf Union creditors, their latest Supreme Court report - obtained by Tribune Business - expressed frustration at how long it was taking to obtain court hearings to deal with various liquidation matters.

Among the key details revealed in the latest report were the doubts expressed by the liquidators about the feasibility of attempting to collect almost $17 million worth of judgments obtained against Gulf Union’s two immediate past owners.

Messrs Garner and Winder also disclosed that they were pursuing a $5.492 million loan balance that was secured on 1,407 acres of Cat Island real estate.

Another important recovery target was a $3.78 million judgment plus interest against another borrower, the liquidators having traced real estate belonging to one defendant.

The Gulf Union Bank insolvency, and subsequent liquidation, has been a long-running saga dating back to 1998, and many Bahamians have forgotten the events that led to its collapse, apart from those who lost significant savings.

While the liquidation has been protracted, Messrs Garner and Winder appear to have achieved a decent recovery for creditors given the circumstances.

Some $0.30 out of every $1 owed to depositors/creditors, totalling around $9 million, has already been paid, and the 45 per cent ($0.45 out of every $1) final total is 67 per cent - two-thirds - ahead of the 27 per cent forecast the liquidators projected when they took over Gulf Union Bank’s affairs in 1998.

Messrs Garner and Winder, projecting that the upcoming creditor distribution would be between 5-10 per cent of every $1 owed, added: “We are of the view that the ultimate recovery should not be less than 45 cents on the dollar, of which 30 cents has already been declared.”

For example, the National Insurance Board’s (NIB) 2011 financial statements revealed that it had just over $2 million on deposit with Gulf Union Bank when it was placed into liquidation. Based on the forecast, NIB is likely to recover around $900,000 of this sum.

While they had been faced with a $23.886 million solvency deficiency at Gulf Union when they took on the job in 1998, Messrs Winder and Garner said this had been cut to $18.05 million at end-December 2010.

“The net income of the liquidation to date, therefore, is $5.836 million,” the duo added.

“Due to depositors and other creditors amounted to $32.74 million at the commencement of the liquidation. Primarily as a result of distributions, the amount due to depositors and creditors has reduced to $23.242 million at December 31, 2010.”

While loans and overdrafts at the start of the liquidation were valued at $6.552 million, the joint liquidators said they had recovered $11.272 million at end-2010.

And there could be more to come. Messrs Garner and Winder are pursuing the mortgage over 1,407 acres on Cat Island, adding: “The balance on this debt at December 31, 2010, was $5.492 million, and the security has been valued at well in excess of this sum.”

Then there was a different loan, against which a $3.78 million judgment and interest from November 2008 had been obtained. Property belonging to one defendant “appeared to have significant value”.

However, the Gulf Union liquidators warned that the prospect of satisfying judgments against the bank’s owners, the Middle East-based Al Thani Group and those they sold it to just prior to its collapse, the Quoreshis, were not promising.

“Whilst we have a default judgment against the Al Thani Group in the amount of $12.5 million, and earlier judgments against the Quoreshis’ for $4.2 million, we are not yet satisfied that the significant amount of expense required to pursue the defendants’ assets would be justified by any ultimate recovery,” the liquidators warned.