The Tribune

• Slams criticism as ‘lacking truth and accuracy’

• Opposed broker/dealer wind-up at every turn

• Yet judge backed committee fears as ‘valid’

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian broker/dealer’s liquidator has resumed battle with his own creditors committee by blasting their criticism of his $1m-plus fees as “significantly lacking in substance, truth and accuracy”.

Ed Rahming, the Intelisys (Bahamas) founder and managing director, who is due to step down as Pacifico Global Advisors’ liquidator at week’s end due to ill-health, slammed the three-man liquidation committee for opposing almost every action has has taken to wind-up the insolvent firm under the Supreme Court’s supervision.

He launched the blistering attack on Luca Lanciano, Pacifico Global’s ex-chief operating officer; Alexander Maillis, an attorney with Maillis and Maillis, representing Pacifico Global’s landlord, Mosko; and Garciar Whyms, managing partner of Capital Corporate Services, in a July 21, 2021, affidavit that sought to rebut their concerns over the compensation he and his attorneys, Callenders & Company, are seeking.

Responding to an “unfiled” affidavit sworn by Sheila Cuffy on the liquidation committee’s behalf, Mr Rahming alleged that the trio’s objections to his fees claim and that of Callender’s stemmed from failing to follow their demands that all Pacifico Global’s clients should have had their assets returned to them “immediately upon appointment” as the broker/dealer’s liquidator.

Asserting that this was not his role under Bahamian law, especially the Companies (Winding Up Amendment) Act 2011 and Insolvency Practitioners Rules 2012, Mr Rahming said the job “involves more than simply transferring assets to persons who request them or transferring the proprietary assets to creditors”.

Pointing out that a liquidator is required to perform multiple tasks, including asset recovery, determining the cause of the company’s failure and assessing the conduct of directors/key management, he added: “A liquidator is statutorily mandated to use his discretion in undertaking his duties and is not statutorily mandated to follow the dictates of the liquidation committee.

“The liquidation committee appears to have taken umbrage because I did not transfer the trust assets and I actually worked as a competent liquidator attending to my statutory duties and not just the liquidation committee dictated duties.”

Continuing, Mr Rahming blasted: “There appears to be an overt effort to confuse the liquidation issues, to potentially confuse the parties, waste the court’s time on inconsequential matters and delay the approval of costs.

“I found the critique of the costs by the liquidation committee to be significantly lacking in substance, truth and accuracy. Essentially, every task that we undertook over the past nearly two years was considered by the liquidation committee as unnecessary and the related cost excessive.”

Mr Rahming alleged that the liquidation committee even challenged the $30 cost for providing account statements to clients, while often failing to justify or provide evidence to support their criticisms. “One one hand they state that the official liquidator has not done what they think should have been done, and that the official liquidator has done insufficient work, and on the other hand they state that too much unnecessary work has been done,” he added.

“Instead, the liquidation committee has mostly provided an argumentative list of general criticisms, colourful adjectives on the amount of the costs, and unsubstantiated statements and attacks without relating to the specific items of costs that have been claimed.’

Mr Rahming’s counter-attack might be viewed as his final salvo before obtaining Supreme Court approval to hand over Pacifico Global’s liquidation to the Deloitte & Touche (Bahamas) duo, Mark Munnings and Tiphaney Russell, at the end of this week.

To conclude his tenure, the Intelisys (Bahamas) chief is requesting that the Supreme Court approve the payment of $1.144m in fees to himself and his firm, and a further $703,000 to Callenders & Co, for a total $1.847m.

Mr Rahming has put forward as an alternative that he be paid 80 percent of his fees under the Insolvency Practitioners Rules, but either way his fees - and that of his attorneys - will come out of the assets in Pacifico Global’s liquidation estate.

The liquidator’s previous reports to the Supreme Court identified Mr Lanciano, one of the three liquidation committee members, as also being a central figure in events leading to Pacifico Global’s collapse.

He alleged that Mr Lanciano issued instructions to redeem a significant amount of investor monies, and have these assets transferred to his new Bahamas-based investment advisory firm, Phoenix Capital Ltd, while still engaged by his now-former employer.

The redemption request, allegedly made without Pacifico Global’s knowledge, triggered a dispute with Mr Lanciano Phoenix Capital that ultimately resulted investment funds containing up to 70 percent of the former’s client assets under management being placed into receivership.

“The dispute arose due to the company [Pacifico Global] apparently not having knowledge of the large redemption request that was made by Phoenix while Lanciano was employed by the company and the proposed change in custodianship from [Pacifico Global] to Deltec Fund Services,” Mr Rahming alleged in his report.

Mr Lanciano and Eliano Tamburini, Pacifico Global’s former chief executive, were named by the liquidator as being responsible for attracting “the majority of clients” on Pacifico Global’s books, and they seemingly sought to take these customers with them when they left.

However, the fees charged by liquidators and their attorneys have increasingly become a bone of contention in Supreme Court-supervised winding-ups. This has especially been the case when liquidators have sought to obtain approval for a portion of their costs to be paid from client assets, which are held in trust/escrow and in a fiduciary capacity, and do not belong to the company being liquidated.

This applies to the Pacifico Global situation, where Mr Rahming is seeking the Supreme Court’s approval to obtain 22 percent of his “general liquidation costs” collectively from client assets along with a $508,512 sum for work done directly on these customers’ behalf.

And Mr Lanciano and the other liquidation committee members previously received backing for their concerns from no less an authority than the Supreme Court of The Bahamas. Justice Ian Winder described as “valid” many of the complaints submitted by the Pacifico Global liquidation committee, which is supposed to represent creditor interests and assist the liquidator in winding-up the insolvent company.

Justice Winder, in a March 9, 2021, ruling, said his initial instinct was that client assets should cover no more than 15 percent of the general liquidation costs. He ruled: “These are trust assets and cannot be unduly burdened with the general liquidation costs for Pacifico Global....

“What is in fact required is a plan to secure a replacement trustee for these funds as the official liquidator cannot efficiently administer them or be expected to manage them. Such a process would thereby minimise the burden to these assets and unnecessary liquidation costs.”

And Justice Winder, backing Mr Lanciano and his colleagues, added: “I accept that much of the complaints of the liquidation committee are valid. The amounts which are said to be attributed to the trust assets not in receivership have been inconsistently stated over the several applications made by the official liquidator for payment of these fees.”

Still, he agreed that Mr Rahming was entitled to be compensated from client assets for work done on their behalf as “to accept otherwise would be wholly inequitable”. However, in granting the liquidator’s request the judge imposed “the caveat that the fees attributable must be in accord with the fees which Pacifico Global would otherwise levied had it not been placed in liquidation”.

The liquidation committee had opposed Mr Rahming and his team recovering “general liquidation costs” from client assets, arguing that this would be “an unreasonable depletion of their capital” on top of the near two-year wait for monies to be returned.