The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

CLICO (Bahamas) liquidator is likely to recover more than $30 million from the insolvent insurer’s main asset, although significant hurdles remain before this can be returned to Bahamian creditors.

Craig A. ‘Tony’ Gomez, the Baker Tilly Gomez accountant and partner, reveals in his latest report to the Supreme Court that he has raised almost $56 million in real estate sales proceeds by selling off the Florida-based Wellington Preserve development to US buyers.

And his latest update on progress in CLICO (Bahamas) liquidation reveals that Wellington Preserve’s wind-up is expected to be completed on New Year’s Eve, after disposing of some 500 acres in the high-end Palm Beach County community.

The near $31 million recovery from Wellington Preserve represents 55.4 per cent of the gross sales proceeds, with Mr Gomez forced to spend the balance on a combination of US taxes, legal fees, real estate commissions, utilities, planning and other expenses.

And much remains to be done before any of that $31 million can be paid out to Bahamian creditors. Mr Gomez must now turn his attention to the liquidation of CLICO Enterprises, the investment vehicle that the insolvent life and health underwriter used for all its non-insurance activities.

His principal obstacle here is the $64.677 million claim against CLICO Enterprises by its affiliate, Clico Trinidad, which the latter alleges represents a guarantee for loans it advanced to the Bahamian company plus an inter-company transfer.

Tribune Business understands that Mr Gomez is likely to fight this claim in the courts, and may also potentially seek to offset it against the $58 million ‘guarantee’ allegedly owed to CLICO (Bahamas) by both sides’ parent, CL Financial.

Victory for Mr Gomez here is critical to determining how much CLICO (Bahamas) creditors will recover, as the Clico Trinidad claim is equivalent to 46.5 per cent of CLICO Enterprises’ total $139.064 million.

Applying the same percentage to the near-$31 million likely to be recovered from Wellington Preserve would see Clico Trinidad walk away with $14.145 million, leaving just under $17 million available for distribution to Bahamian creditors when that sum is finally upstreamed to CLICO (Bahamas) estate.

Still, Mr Gomez told the Supreme Court that “the expected completion” of Wellington Preserve’s wind-up is set for 2015. “US counsel advised that the tentative date to have Wellington Preserve wound-up will be December 31, 2015,” he said.

Wellington Preserve represented CLICO (Bahamas) main asset. Its purchase and initial development were financed by $73.8 million in advances from the insolvent insurer to CLICO Enterprises - transactions that Mr Gomez believes might have breached Bahamian exchange control regulations and been conducted without the necessary approvals.

“The complete inventory of available land totalling 523 acres was sold, and a portion used for infrastructure development,” Mr Gomez explained of Wellington Preserve’s liquidation.

“Land sold totalled 500.49 acres, and the remaining 22.51 acres was used for infrastructure development.”

Mr Gomez said his remaining challenges relating to Wellington Preserve involved settling the $73.8 million investment made by CLICO Enterprises in the project, and the “continuing investigation” into the funds disbursed by CLICO (Bahamas).

For despite the almost-$31 million recovery from Wellington Preserve, CLICO Enterprises remains massively insolvent. Its total assets of $40.878 million are dwarfed by $139.064 million in liabilities, more than half of which is the $73.8 million owed to CLICO (Bahamas), thus leaving a $98.187 million deficit.

Next February will mark seven years since CLICO (Bahamas) was placed into Supreme Court-supervised liquidation, with Bahamian creditors yet to receive a single cent owed to them, and policyholders yet to be transferred to another carrier or recover their life savings and long-term investments.

“It appeared that insurance funds could have been transferred out of CLICO without the approval of the Insurance Commission of the Bahamas or the Central Bank of the Bahamas,” Mr Gomez alleged.

He added that a forensic accounting report he had commissioned from accountant John S. Bain, of UHY Bain & Associates, had come up with “certain findings of suspicious cash transactions” relating to how funds were transferred from the Bahamian insurer to entities owned and controlled by its ultimate principal, Lawrence Duprey.