The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

An accountant is facing opposition from his own liquidation committee as he bids to obtain over $1m in compensation for efforts to wind-up a collapsed Bahamian broker/dealer.

Ed Rahming, the Intelisys (Bahamas) founder and managing director, saw his request for Supreme Court approval to recover costs from client assets held by Pacifico Global Advisors largely stymied by a March 9, 2021, ruling from Justice Ian Winder.

With the failed broker/dealer’s own remaining assets insufficient to cover all winding-up costs, Mr Rahming had sought the Supreme Court’s permission to cover costs incurred to-date from client monies and other assets that the firm is holding in trust in a fiduciary capacity.

The Intelisys (Bahamas) chief wanted judicial sanction to deduct a percentage from all clients’ assets to cover costs associated with work done to secure and return these funds to their rightful owners, as well as another deduction to meet “general liquidation costs”. These deductions were to be levied on a “pro rata” basis so that all assets contributed an equal share.

However, Justice Winder only granted Mr Rahming permission to cover costs directly associated with work that benefited Pacifico Global client assets, and refused to consider the application for further deductions to cover general liquidation expenses.

He described as “valid” many of the complaints submitted by Mr Rahming’s own Pacifico Global liquidation committee, which is supposed to represent creditor interests and assist the liquidator in winding-up the insolvent company.

And Justice Winder went so far as to call for the Intelisys (Bahamas) chief to find a replacement trustee to take over stewardship of the client assets given that he “cannot efficiently administer them or be expected to manage them”.

Mr Rahming declined to comment when contacted by Tribune Business but, detailing the liquidation committee’s opposition to his compensation request, Justice Winder said they were opposed to him and his team recovering “general liquidation costs” from client assets.

“Other than stating that there are insufficient assets belonging to the company to pay the liquidation costs,” the liquidation committee alleged in its opposing arguments, “the official liquidator does not explain how the costs that he seeks to have paid are either reasonable or relate to work that was of benefit to the owners of the non-client assets.

“Nor does the official liquidator explain why he did not moderate his expenditure so that he did not exceed the assets on the books of the company. Aside from the apparently excessive and unjustified running up of expenses, there is significant cause for concern as to the manner in which the official liquidator is conducting the liquidation generally.”

The liquidation committee voiced concern that some $1.95m that should have been turned over to the receiver of an investment fund structure had been “co-mingled” with assets owned by Pacifico Global itself, given that this sum was shown as part of the $2.474m on the broker/dealer’s balance sheet.

“The liquidation committee is concerned that the amount of costs claimed by the official liquidator (in excess of $1m) would represent approximately 10 percent of the clients’ assets,” the committee’s members added, describing this as “an unreasonable depletion of their capital” on top of the near two-year wait for monies to be returned.

Justice Winder, though, 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”.

And, when it came to the Intelisys (Bahamas) chief recovering the general liquidation costs, Justice Winder ruled: “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.”

While indicating that any levy to cover these costs should be no more that 15 percent, Justice Winder declined to make a decision and added: “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.”

The liquidation committee’s three members are Alexander Maillis, an attorney representing Pacifico Global’s former landlord, Mosko Realty; Paul Winder of Deltec Bank & Trust, which acted as administrator for a series of funds the broker/dealer’s clients were invested in; and Luca Lanciano, head of Phoenix Capital, his own financial services boutique.

Mr Lanciano, Pacifico Global’s former chief operating officer, was alleged to have started his firm while still working for the collapsed broker/dealer. Mr Rahming, in an earlier report to the Supreme Court, claimed he issued instructions to redeem a significant amount of investor monies and have them transferred to Phoenix Capital while still engaged by his now-former employer.

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