The Tribune

• Bahamas liquidator awaits huge Trinidad payout

• Could potentially make policyholders, Gov’t whole

• By more than covering insurer’s $68m insolvency

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

CLICO (Bahamas) liquidator has been given the authority to accept a $110.827m settlement that could fully repay all debts owed to policyholders, creditors and the Government.

Chief Justice Sir Ian Winder, in what was hailed yesterday as a potential “quantum leap forward” for the insolvent insurer’s long-suffering victims, has given Craig A. ‘Tony’ Gomez, the Baker Tilly Gomez accountant and principal, the go-ahead to accept the sum offered by liquidators for its Trinidad-based parent, CL Financial.

“The official liquidator be at liberty to accept the amount of $110.827m adjudicated by the official liquidators of CL Financial on CLICO (Bahamas) proof of debt filed on May 16, 2018, in CL Financial’s liquidation,” the Chief Justice wrote in a July 24, 2023, Order filed with the Supreme Court.

The nine-figure sum represents a settlement of CLICO (Bahamas) claim against its Trinidadian parent, which is being wound-up in the latter country’s courts. CL Financial had guaranteed $58m, or 79.5 percent, of the monies its Bahamian subsidiary had advanced to another group entity, CLICO Enterprises, which subsequently defaulted on the loan repayments.

Mr Gomez, as CLICO (Bahamas) liquidator, had argued that the insolvent Bahamian insurer was a secured creditor of CL Financial. The $110.827m represents the claim that the latter’s liquidators have accepted as owing and agreed to pay, with that offer understood to have been made in writing and now approved by both the Bahamian liquidator and Supreme Court.

The funds, though, have yet to be paid as CL Financial’s liquidators are still assessing the merits of other claims against the pan-Caribbean financial conglomerate which collapsed in early 2009. CLICO (Bahamas) and its policyholders/creditors now have to “sit and wait” to see if their approved claim comes through, amid expectations it will likely be paid some time in 2024.

While major claims in the long-running CL Financial liquidation have likely been accounted fir already adjudicated, there remains the possibility that something unexpected may arise at the last minute that could throw both the entire process and the payout to CLICO (Bahamas) off-track.

However, should the full $110.827m materialise, it would seemingly more than fill the $68.369m solvency deficiency shown in CLICO (Bahamas) accounts in the last report to the Supreme Court by Mr Gomez. The report, covering the six months to end-June 2022, shows the insurer’s $29.366m worth of assets are dwarfed by $97.735m in liabilities.

The bulk of those liabilities, some 62 percent, represent $60.552m due to policyholders and the Government. The latter previously stepped into CLICO (Bahamas) shoes and has, since the last Christie administration, been making payouts to policyholders who assigned these contracts to the Government. This means the latter now stands in their place and will be compensated by the liquidator’s recovery.

Mr Gomez remains gagged by the Supreme Court in his role as CLICO (Bahamas) liquidator and is unable to speak publicly. However, sources familiar with a liquidation that has now lasted 14-and-a-half years said there is now hope he can recover the majority - if not 100 percent - of what is owed to remaining policyholders and the Government.

“They believe they would have sufficient to make good and full policyholder claims,” one source, speaking on condition of anonymity, told this newspaper once the settlement from Trinidad is paid. “They are not looking for cents on the dollar. They are looking for the full amount.”

Simon Wilson, the Ministry of Finance’s financial secretary, told Tribune Business in June 2023 that the Government had slowed down payouts to former policyholders because the Government is hoping to “shortly make a major announcement on CLICO”.

He declined to go into details at the time on the basis it would be premature to do so, but said: “I think we should be in a position to make a major announcement on CLICO shortly. I just want to be cautious and not move prematurely. That’s one of the reasons we’ve slowed down the payouts.” It is understood, though, that Mr Wilson was referring to the impending settlement from CL Financial.

Hundreds, and possibly thousands, of CLICO policyholders stand to benefit if that payment comes through. Bishop Simeon Hall, who was among those impacted by the life and health insurer’s 2009 implosion, told Tribune Business of the potential nine-figure payout: “That’s good news. We could always use the good news. Christmas is coming.

“That’s commendable. It lifts those of us who sometimes doubt whether we can get justice in the land through the court system. This reassures us that can still happen. It’s a quantum leap forward for those who were waylaid by this debacle. I’m sure those persons who got absolutely nothing will be very encouraged. That could go far. I have to check into that. That’s good news for those who got absolutely nothing.

“To be honest, what is most sad is that there were persons who died and got no response from CLICO. Maybe their families should get involved. I want to encourage them to seek legal recourse to see if they can capture some of that. I want to encourage everyone who lost money to take legal action and get their money back.”

Bishop Hall, describing the impact of CLICO (Bahamas) collapse on its policyholders and clients as “so sad”, argued bluntly: “It should never have happened. We need to find ways, when investors come to the country - invite them, yes - but they should put up some money in abeyance, as a bond, in case this happens. Fourteen years later and we’re still fighting.

“The poor people who put money into this multinational institution should not suffer. We need the Government’s protection. I was among those of us who put that money there for my retirement, and that’s church money. It just takes so long. Justice delayed is justice denied.”

Tribune Business understands that CLICO (Bahamas) liquidation estate, and its policyholders/creditors, could also benefit from a further $30m held at CLICO Enterprises. This represents funds that Mr Gomez, in his capacity as liquidator, recovered from the sale of the Wellington Preserve real estate project in Florida and are now waiting to be upstreamed to the insolvent Bahamian insurer. That would take total recoveries to $143m

The rejection of an $18.734m claim against CLICO (Bahamas) from its Suriname affiliate earlier this year will also benefit the recovery for Bahamian policyholders. The Supreme Court verdict confirms that the Suriname affiliate ranks below them in the creditors queue, and also sets a precedent over similar claims by CLICO’s Guyana affiliate.

Together with Suriname, these recovery claims are understood to collectively total $54m, but they have now been pushed down below Bahamian creditors who will take precedence and priority over them.

Explaining the origins of the near-$111m settlement with CL Financial, Mr Gomez wrote in his last report to the Supreme Court: “During the period from December 2003 to December 2008, CLICO (Bahamas) made advances to CLICO Enterprises in the amount of $73m.

“These funds were sent to various subsidiaries of CLICO Enterprises and other service providers on behalf of CLICO Enterprises to pay ongoing expenses, inclusive of capital expenses, in particular to Wellington Preserve, a US company.

“A substantial amount of these advances were guaranteed in April 2008 by the parent company, CL Financial, in Trinidad. CLICO Enterprises has defaulted on its obligation to repay these funds and I am now actively pursuing the enforceability of the CL Financial ($58m) guarantee to CLICO (Bahamas).”

Confirming CLICO (Bahamas) had filed a claim “as a secured creditor” in CL Financial’s liquidation, and provided proof of debt, Mr Gomez added: “Based on the guarantee, CL Financial agreed that in consideration of CLICO (Bahamas) from time to time extending credit to CLICO Enterprises, that CL Financial guaranteed the repayment and discharge of all monies and liabilities due.

“It is my view that the CLICO (Bahamas) liquidation has a strong claim, which supports the liquidator incurring the costs of pursuing this claim against CL Financial.” BAF Financial is currently managing the CLICO (Bahamas) life and pension policies that remain in force.

For those that were assigned to the Government, all surrendered policies, death benefits and CLICO (Bahamas) staff pensions are to be paid in full. Annuity holders and pension beneficiaries were to receive a maximum $10,000, with the balance supported by a seven, ten or 15-year promissory note and interest paid on these quarterly.

Mr Gomez was appointed as liquidator after (CLICO) Bahamas was placed in Supreme Court-supervised liquidation in April 2009 following the financial difficulties that engulfed its Trinidad-based parent, CL Financial, which was chaired by Lawrence Duprey.

Despite findings that CLICO (Bahamas) broke Bahamian exchange control laws, plus other rules and regulations, with its investments in the Wellington Preserve real estate project in Florida, nobody has been held accountable or responsible for a corporate failure that impacted the domestic economy and hundreds of lower and middle income earners.