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RE:
BANK CROZIER LIMITED (IN LIQUIDATION)
Introduction
1.
On 24th July 2003 I
was appointed by the court to be the liquidator of Bank Crozier
Limited (the bank).
2.
Pursuant to paragraph 16 of the
Liquidation Order, this is my third report.
3.
The objectives of my
appointment are to:
·
Determine the potentially
realizable assets of the Bank;
·
Assess the number and value
of legitimate creditors claims;
·
Assess the extent to which
creditors legitimate claims can be met;
·
Assess the extent of
progress made in accomplishing the tasks set out in the
Liquidation Order; and
·
Form a view regarding the
likely future direction of the liquidation.
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Assets
Cash at Bank
4.
The cash at Bank in Grenada is
the sum of USD$ 5,000,000 in an account at RBTT Bank Ltd. in
which the said amount has been frozen by the High Court pending
the outcome of two court actions (namely the BCIL Suit and the
Carla Bella Ltd. Suit) and USD$176,134 in the account at the
Grenada Co-operative Bank Limited. No dates have yet been set
for the hearing of the two court actions.
5.
BAC Florida
As of March 31st, 2004 Bank
Crozier’s membership with MasterCard International (MasterCard)
was terminated. Bank Crozier’s unpaid obligations to MasterCard
was USD$ 490, 346.00 leaving a balance of USD$ 109,654.00 which
was returned to the Liquidator via BAC Florida on March 31st,
2004, with further transmission to an account held in the
Liquidator’s name at the Grenada Co-Operative Bank. (See
Appendix A)
Stourbridge
6.
Documents were submitted to the
Liquidator Blake Elyea of KPMG in Vancouver, Canada on 28
October 2003. Mr. Blake has filed two reports concerning
Exchange Bank and Trust Ltd. (See Appendix B;
Receivers Reports to the court) I am in the
process of filing a claim with Mr. Elyea in order to secure a
portion of the liquidated funds.
Bear Stearns
7.
My US attorney and I met with
Mr. Todd B. Hesse of Bear Stearns at his office in Manhattan on
18 March 2004. We attempted to determine the nature of the
investment and what realization was possible at this point. We
also sought to determine what Bear Stearns knew when they
accepted funds from Mr. Johansson, particularly regarding the
origin of those funds and Mr. Johansson’s obligations to the
Bank’s creditors and legitimate depositors.
8.
Early in the meeting it became
apparent that we would need to pursue a legal solution in
respect of the retrieval of funds invested in the Bear Stearns
Partnership arrangement. Mr. Hesse quickly referred us to his
legal department since he was only willing to discuss with us
technical matters relating to the investment.
9.
All matters regarding our
position with Bear Stearns Venture Partners are now in the hands
of US legal counsel. I intend to pursue this matter until there
is a reasonable and satisfactory outcome beneficial to all
creditors. I cannot comment further at this stage.
Blue
Ocean Properties
10.
On 11 February 2004, the sole
director of Blue Ocean Properties resigned clearing the way for
the Liquidator to take full control of the company and the
properties under its control. The fact that the properties
controlled by Blue Ocean Properties Limited are beneficially
owned by Bank Crozier Limited has never been contested.
11.
The land held at Point Salines
in St. George’s has been sold. The proceeds are shown in the
table of Income and Expenditure under the heading “proceeds from
the sale of land”. Two valuations were obtained on the land
prior to it being sold. I continue to occupy the house at Lance
Aux Epines as the bank’s liquidation office and document centre
since it continues to be a cheaper option than paying rent at
any other facility (in the last six months alone I have saved US
$16,300 on rental expenses).
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12.
Letters have been sent to all
creditors who submitted notarized claims to the Liquidator
requesting additional documents to legitimize their claims
against the Bank. As at August 12th, 2004 I have
accepted fourteen (14) claims with a total value of USD$
1,720,811.10. (See Appendix C)
13.
Progress to date
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14.
Several creditors, some
legitimate and others of lesser standing applied to the court in
February 2004 for the removal of the liquidator and the
appointment of David Holukoff of PricewaterhouseCoopers and Mr.
Floyd Patterson of Pannel Kerr Forster, St. Vincent and the
Grenadines as the new Liquidators. The court granted leave for
the application to proceed and a full hearing ensued after which
the court rejected all the submissions of the Applicants. A copy
of the Judgment is exhibited hereto. (See Appendix D)
Matters before the Court
15.
I have successfully defended
two actions brought against me as Liquidator before the High
Court.
16.
In Civil Appeal No. 27 of 2003
– Daryl Sands, Controller of Bank Crozier Ltd. v. Garvey
Louison, Liquidator of Bank Crozier Ltd. and Civil Appeal No. 30
of 2003 – Daryl Sands, Controller of Bank Crozier Ltd. v. Garvey
Louison, Liquidator of Bank Crozier Ltd. in which Daryl Sands
filed an appeal against both judgments of Pemberton J. The
Liquidator made two applications before the Court of Appeal
seeking Orders of the Court of Appeal that Mr. Sands as
Appellant provide security for costs in each of the two Appeals
and that in the meantime all further proceedings be stayed and
that each Appeal should stand dismissed if such security is not
provided in the time prescribed. (See
Appendix E and
Appendix
F)
17.
In Civil Appeal No. 30 0f 2003
– Daryl Sands, Controller of Bank Crozier Ltd and Garvey
Louison, Liquidator of Bank Crozier Ltd., the Court of Appeal
ordered that Mr. Sands within fourteen days of the Order give
security for the Liquidator’s costs in the amount of EC
$100,000.00 and that in the meantime all further proceedings be
stayed. In Civil Appeal No. 27 of 2003, the Court of Appeal
ordered that the Appeal stand dismissed if such security was not
provided within the time prescribed. (See
Appendix E and
Appendix
F)
18.
In Civil Appeal No. 30 – Daryl
Sands, Controller of Bank Crozier Ltd and Garvey Louison,
Liquidator of Bank Crozier Ltd. the Court of Appeal ordered that
Sands within seven days of the Order give security for the
Liquidator’s costs in the amount of EC $50,000.00 by deposit of
the same to the Court; that in the meantime all further
proceedings be stayed. In Civil Appeal No. 30 of 2003 – Daryl
Sands, Controller of Bank Crozier Ltd and Garvey Louison,
Liquidator of Bank Crozier Ltd. it was ordered by the Court of
Appeal that the Appeal should stand dismissed if such security
is not provided within the prescribed time. (See
Appendix E)
19.
It was further ordered that
Sands pay the costs of the Applicant in the amount of ECD$
1,500.00 for each of the Civil Appeals. A copy of the Judgment
is attached hereto (See Appendix F)
20.
Mr. Sands met the required
security for costs deposit provisions in both cases. Both
Appeals were scheduled to be heard during the November 2004
sitting of the Court of Appeal, however, due to the passage of
Hurricane Ivan, those matters are now scheduled to be heard
during the February 2005 sitting of the Court of Appeal.
21.
During my interview with Cora
Felix (at the time General Manager of Bank Crozier Ltd) in
August 2003 she confirmed Scott Wilson’s involvement in the
management and control of the Bank. When it became clear that
the very existence of the Bank was in question and that the
management of the institution had to be changed in order to
proceed with any form of proposal to the authorities, Scott
Wilson was put forward as a credible alternative to the existing
management. Scott Wilson was put forward inspite of the
well-established fact that he had been involved in the running
of the affairs of the Bank during earlier times.
22.
On 11 June 2003 Scott Wilson
wrote a detailed proposal called “Bank Re-capitalization Plan”
which was addressed to Mrs. Sharon A.N. Griffith, Executive
Director, Grenada International Financial Services Authority (GIFSA).
This plan was also intended to be presented to the court on the
day of the liquidation hearing as a means of putting forward an
objection to the liquidation proceedings. In his plan Scott
Wilson proposed that all matters arising from a perusal of the
plan should be discussed with himself, Peter Johansson and one
Denzil Thomas.
23.
The full plan is annexed at
Appendix G, however the following is a summary of the mains
elements:
·
Investors will take 100% shares
in the Bank;
·
He had the commitment of two
investors to put new equity into the Bank;
·
New equity and a new Board of
Directors will be introduced to the Bank with a further
commitment to immediately bring substantial deposits and
business;
·
New business will be brought to
Grenada by way of a call centre;
·
The pending legal matters,
Carla Bella and BCIL will be resolved;
·
All major assets will be moved
out of the Bank;
·
All depositors will be moved
out of the Bank and replaced with cash;
·
The Bank will be maintained as
an ongoing operation;
·
The plan should satisfy many of
the matters raised by the authorities as well as allow
depositors to receive a high percentage of deposit funds with a
possibility of receiving 100% within one year; and
·
The authorities should withdraw
their proposal for the liquidation of the bank.
24.
In my view Scott Wilson is one
of the persons who needs to explain his role in the bank and any
other information that he might possess regarding the
disappearance of depositor’s funds.
Collections and Disbursements
25.
Table A below shows the
classification of collections and disbursements for the period
February 2004 to June 2004. A summary of these collections and
disbursements is shown in Appendix H.
|
Description |
|
Collections USD$ |
|
Sale of Land |
|
115,000 |
|
Sale of Office Furniture |
|
637 |
|
Costs awarded in
settlement |
|
1,873 |
|
Brought forward |
|
649,390 |
|
Total |
|
$766,900 |
|
Description |
Disbursements USD$ |
|
|
Legal & Accounting Fees |
127,986 |
|
|
Utilities |
30,122 |
|
|
Staff Salaries |
32,326 |
|
|
Outstanding Bills |
47,634 |
|
|
Office Expenses |
21,195 |
|
|
Expense Claims |
112,507 |
|
|
Agent’s Fees |
54,556 |
|
|
Liquidator’s Fee |
105,000 |
|
|
Office Moving Costs |
18,179 |
|
|
Publication Expenses |
14,241 |
|
|
Security |
19,112 |
|
|
Other |
8,891 |
|
|
Total |
$591,749 |
|
|
Balance |
|
$175,151 |
Future
direction of the Liquidation
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26.
The results of the court
challenges, in particular the Carla Bella and BCIL Injunctions
freezing the USD $5 Million in the banks in Grenada are central
to a distribution to legitimate creditors. I do not have court
dates for the hearing of these matters at this time. In event I
cannot predict the proportion of that distribution neither the
particular time frame within which the distribution is likely to
take place.
27.
At this point my work has not
progressed sufficiently to allow me to:
·
Determine the potentially
realizable assets of the Bank;
·
Assess the exact number and
precise value of legitimate creditors claims;
·
Assess the extent to which
creditors legitimate claims can be met;
·
Assess the extent of progress
made in accomplishing the tasks set out in the Liquidation
Order; and
·
Form a view regarding the
likely future direction of the liquidation.
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