The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A key CLICO (Bahamas) asset was forced to close due to pressure from trade creditors and the failure to pay its Grand Bahama Port Authority (GBPA) licence fee.

Craig A. ‘Tony’ Gomez, the insolvent insurer’s liquidator, confirmed in his latest report to the Supreme Court that Grand Bahama Millworks and Building Supplies Ltd was forced to “suspend operations” last June.

The report, which was only filed with the court in recent weeks, reveals that Mr Gomez discussed with his attorneys on June 30 last year the issue of paying “staff salaries and severance” to Grand Bahama Millworks staff.

The hardware and building supplies store was one of the major Bahamas-based assets held by CLICO Enterprises, the affiliate which received advances totalling $73.8 million from the insolvent insurer.

“Grand Bahama Millworks is currently experiencing liquidity issues, and the creditors of Grand Bahma Millworks are now threatening legal action,” Mr Gomez warned in his Supreme Court report.

“I am currently reviewing the matter with a view to temporarily suspending the company’s operations.”

That was not the only problem facing Grand Bahama Millworks in mid-2014. “On February 26, 2014, I was advised by the manager of Grand Bahama Millworks that he was visited by a representative from the Grand Bahama Port Authority (GBPA) and two members of the Royal Bahamas Police Force, inquiring on the payment of the outstanding licence fees,” Mr Gomez said.

“This matter was reviewed by general counsel and myself, but the unresolved corporate matters with regard to the operation of Grand Bahama Millworks precluded me from resolving the outstanding licence fee matter.”

Prior to the Port Authority intervention, Mr Gomez and his attorneys, Lennox Paton, had been engaged in a document hunt to determine Grand Bahama Millworks’ beneficial ownership and its financial condition.

Despite unearthing an agreement that appointed CLICO Enterprises as Grand Bahama Millworks’ manager for 99 years, and gave it ownership of the store, Mr Gomez said it was still unclear what powers the former entity had.

He ultimately ran out of time, as the Grand Bahama Port Authority informed him on May 28, 2014, that Grand Bahama Millworks’ licence had been cancelled.

“As at the date of this report, Grand Bahama Millworks’ store operation has been suspended and all matters related to the closure of the store are being addressed, which includes the outstanding licence fees due to the Port and the company’s liquidity matter,” Mr Gomez wrote.

The closure means that CLICO (Bahamas) creditors are unlikely to realise any recovery from this asset, further exacerbating the solvency deficiencies faced by both itself and CLICO Enterprises.

Mr Gomez said it was “unlikely” that the $73.8 million loan the latter received from CLICO (Bahamas) could be recovered in full. This was because the value of CLICO Enterprises’ largest asset, the Florida-based Wellington Preserve real estate project, could not be realised given current market conditions.

As at end-June 2014, CLICO Enterprises was shown to have a solvency deficiency of $94.047 million. This stemmed from assets of $45.016 million, which were dwarfed by some $139.064 million in liabilities.

As for CLICO Enterprises’ other Bahamas-based assets, Mr Gomez said its purported ownership of the eight units at Freeport’s Golf View Apartments complex was not supported by any Investments Board permits.

He added that seven of the units had been conveyed to CLICO Enterprises, with CIBC FirstCaribbean International Bank (Bahamas) possessing a lien over all of them.

“As at the date of this report, the permits have not been located, and counsel have requested certified copies of the permits from the Investments Board,” Mr Gomez said.

“This will allow the conveyances for the apartment units to be lodged for recording, and a fee will be required for the same. In accordance with the International Persons Landholding Act, the conveyances are void without a permit.”

The Baker Tilly Gomez partner and accountant then revealed that a forensic accounting report, focusing on funds transferred from CLICO (Bahamas) to companies controlled by its ultimate Trinidadian owner, Lawrence Duprey, had uncovered “certain findings of suspicious cash transfers”.

The report was prepared by accountant John Bain, of UHY Bain & Associates.