The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

CLICO (Bahamas) liquidator is aiming to raise another $20 million before closing the sale of its main asset, a sum that would enable him to hit his $50 million target “pretty much spot on”.

Ronald Neiwirth, the US-based attorney acting for the insolvent insurer’s liquidator, Baker Tilly Gomez accountant and partner, Craig A. ‘Tony’ Gomez, told Tribune Business that their strategy of selling the Wellington Preserve development in small land parcels to maximise sales returns was continuing to pay off.

Disclosing that the liquidator had received $1 million from a Wellington Preserve sale just last week, Mr Neiwirth said between $26-$28 million in gross proceeds had been generated to-date. He and Mr Gomez, who started with more than 520 acres, had now reduced this to between180-200 acres still available for sale.

“It’s been moving,” Mr Neiwirth told Tribune Business of the Wellington Preserve liquidation. “We had a closing within the last week on one little piece. I understand approximately $1 million hit the trust account we’re keeping for that in the last few days.”

The US attorney revealed that Wellington Preserve real estate sales were still achieving a $100,000 per acre price. The latest 10-acre sale was to the largest purchaser of property at the development to-date, the J-5 investor group, who wanted to better tie their existing 140 acres together.

“I would say that from this point forward, and assuming the average price per acre stays the same, we’re looking to raise another $20 million or so,” Mr Neiwrith said of his and Mr Gomez’s ambitions.

“I think we’ve probably raised somewhere in the order of $26-$28 million, approximately. The original estimate for what we might raise from over here was in the order of $50 million. That was where the estimates came out, and it’s looking like we’re going to hit them pretty much spot on.”

A successful liquidation of Wellington Preserve is vital to the outcome of the CLICO (Bahamas) winding-up. This is because the south Florida-based real estate development accounts for 63 per cent, or almost two-thirds, of the insolvent insurer’s total assets.

Wellington Preserve’s continued sell-off represents the first, modest bit of good news for CLICO (Bahamas) long-suffering 14,000 Bahamian policyholders and creditors more than four years after the insurer was placed into liquidation. But, while the $50 million figure sounds impressive, it is somewhat dwarfed by the insurer’s $73 million total exposure to the project.

While these figures imply 68.5 cents out of every $1 owed will be returned to CLICO (Bahamas), the actual recovery is likely to be less than that. The figures referred to by Mr Neiwirth are ‘gross’ sums, in that various costs and US-based creditors have to be paid out of that $50 million.

Some $10 million has already been used to pay-off non-Bahamian creditors, while Mr Gomez also has to fund the continuing sales effort, liquidation costs and Wellington Preserve’s ongoing maintenance. As a result, the final recovery will probably be closer to $40 million, or 54.8 cents out of every $1 owed to CLICO (Bahamas).

Still, Mr Neiwirth told Tribune Business that Mr Gomez’s decision to reject “a low ball offer” to purchase the entire Wellington Preserve project en bloc was paying off, as it was enabling him to maximise the sales price and recovery for Bahamian creditors.

“There had been, shall we say, one low ball offer for the rest of the property, but the liquidator didn’t think it was sufficient,” the US attorney said, “so we continued the course of selling it piecemeal by the acre.

“The tough decision was the liquidator’s, because he had an opportunity to sell the remainder much more cheaply per acre. But he decided to go the course, as there seems to be fairly healthy activity for sales at the moment. There’s several others out there at the moment for several different size pieces.”

Mr Neiwirth said Wellington Preserve was continuing to benefit from a rebound in the south Florida real estate market. Mr Gomez had inherited 520-plus acres when CLICO (Bahamas) was placed into court-supervised liquidation, and his attorney told Tribune Business: “The remainder that is not under contract is down to approximately 180-200 acres.

“There are people I know looking at 15 acres here, 20 acres there. It continues. We have our own sales strategy mapped out, if you will, which is essentially bunching lots together in some attractive fashion to attract purchasers, and it seems to be working………

“This is basically a real estate transaction now. The Chapter 11 bankruptcy is over, all the US creditors are paid, and the entire net now goes upside back to CLICO Enterprises to be dealt with by the Bahamian Supreme Court.”

The largest US creditor had been federal and state real estate taxes. With these now settled, Mr Neiwirth said Mr Gomez had been “leaving us with money as working capital, to pay-off taxes, carrying costs and so forth. Otherwise the money goes upstream back to the liquidator”.

Back in the Bahamas, the liquidator is still being forced to operate an insurance company. This is because the Government has yet to come through with the promised $30 million guarantee required to back-stop the sale of CLICO (Bahamas) 14,000-strong policy portfolio to another underwriter.

Obtaining the guarantee is vital to transferring the remaining life, health, pension and annuity policies to another insurance carrier. Given the insolvent insurer’s solvency deficiency, with liabilities likely exceeding recovered assets, the guarantee is needed to underwrite their purchase.

Tribune Business understands that potential buyers have already communicated to Mr Gomez that they will not be interested in acquiring the CLICO (Bahamas) portfolio unless the Government’s $30 million guarantee is in place. And, of course, transferring the remaining policies to another insurer is one of the most vital steps to concluding a successful CLICO (Bahamas) liquidation.

At end-June 2012, CLICO (Bahamas) portfolio contained 13,835 policies with a total surrender value of $20.074 million and cumulative sum assured of $1.093 billion.

There were few new developments detailed in Mr Gomez`s last report to the Bahamian Supreme Court, published back in December. CLICO (Bahamas) Bahamian balance sheet showed a solvency deficiency of $22.162 million at June 30, 2012, with total assets worth $44.794 million outmatched by liabilities totalling $66.956 million.

Mr Gomez had also made little progress in enforcing the $58 million guarantee given in favour of CLICO (Bahamas) by its Trinidadian ultimate parent, CL Financial. If that is successfully enforced, it could repair the hole in the Bahamian insurer`s balance sheet.