The Supreme Court of Grenada And the West Indies Associated States

The Supreme Court of Grenada
And the West Indies Associated States
High Court of Justice
(Companies Winding-up)
SUIT NO. GDAHCV 2002/0324
BETWEEN
IN THE MATTER OF IMPERIUM BANK LIMITED (IN LIQUIDATION)
AND
IN THE MATTER OF THE OFFSHORE BANKING ACT, 1996, NO.39
AND
IN THE MATTER OF THE COMPANIES ACT NO. 35 OF 1994
AND
IN THE MATTER OF THE INTERNATIONAL COMPANIES
ACT 1990, CAP. 152
Third and Final Report of
Marcus A. Wide Liquidator
November 2 2012
Introduction:
1. Pursuant to an appointment by the Minister of Finance on April 25, 2002 as Controller of
Imperium Bank Limited (In Liquidation) ("the Bank") under Section 20(7) of the Offshore
Banking Act, 1996 No. 39 ("the Act"), I was instructed to take control of the Bank in
accordance with the provisions of the Act.
2. I assumed control of the Bank on April 25, 2002 and determined that for the most part,
business decisions relating to the Bank were performed in the United Kingdom and
limited information was kept in Grenada. As a result of my reports to the Minister of
Finance, the Minister determined that the licence of the Bank should be terminated and
that the Bank be wound up.
3. As a result of a Petition made by the Minister, I was appointed Provisional Liquidator on
July 25, 2002, and the Liquidation of the Bank was affirmed by the Court on June 25,
2003 when I was appointed Liquidator.
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4. My first report to the Court on the Liquidation was completed on February 4, 2004, and
the Second Report in this matter was filed on or about February 23, 2010, with a short
Errata Report filed a few days thereafter.
5. The purpose of this Third and Final Report is threefold; firstly, I wish to provide an
update as to the claims process which has been conducted in this Liquidation; secondly,
it is necessary to correct certain information reported in the February 2010 Second
Report; and thirdly, I wish to advise this Honourable Court that given the successful
completion of the claims process in this matter and the distribution to creditors of all of
the Bank's divisible property, no further action shall be undertaken by the Liquidator, and
the liquidation of the Bank is at an end. Estate counsel has been requested to take
necessary steps to see to my discharge and release as the Bank's Liquidator.
Claims Process:
6. In late December 2011, the Liquidator's staff mailed and/or emailed claims packages to
known depositors of the Bank, which packages included a statement of the balances in
depositors' respective accounts with the Bank as of the June 25, 2003 commencement
of the Liquidation. Parties receiving claims packages were asked to file a proof of debt
and were given detailed instructions in this regard. A Claims Bar Date of February 16,
2012 was fixed by the Liquidator, and published notices envisaged a possible
distribution to creditors as early as February 17, 2012.
7. All pertinent information respecting the claims process was posted on the Liquidator's
website (www.pwc.com/brs-ibl), as were electronic versions of claims forms, the
applicable notice of intended distribution and Claims Bar Date, and further information in
respect of the claims process.
8. In respect of the claims process carried out in relation to the Bank, some 34 creditors
with claims in the aggregate amount of $1,456,264.79 lodged proofs of debt with the
Liquidator. The Liquidator has admitted the claims of 30 creditors, representing total
claims of $1,353,387.39.
9. The claims of four creditors were rejected by the Liquidator, and there were no resulting
appeals filed.
10. The estate dividend distribution process commenced on July 10, 2012, and to date,
dividends totalling $475,810.37 have been distributed to proven creditors of the Bank.
The dividend represents a recovery to proven creditors of 35.15% of their claims. An
administrative reserve in the amount of $70,634.09 presently remains undistributed.
11. As set forth below, upon review by the Liquidator, the claims of related Imperial
Consolidated Group entities IC Mutual Limited, Commercial and Asset Backed
Placements Limited, and I.C.S. Placement Limited, which collectively totalled
$16,826,583 have been found to be lacking in supporting evidence and shall not be
honoured. These claims had been referenced at paragraph 13 of the Liquidator's
third & final report of imperium bank limited - nov2 2012 final
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Second Report filed in February of 2010, though no evaluative comments were made
with respect to these claims therein.
12. Given that the Bank's assets have been fully and finally distributed amongst those
creditors participating in the claims process which has been completed, the Liquidation
of the Bank is at an end, and I have instructed Estate counsel to seek my discharge and
release as Liquidator in accordance with the provisions of the Act and the Companies
(Winding-up) Rules of 1909.
Imperial Consolidated Group
13. As I have reported in the past, the Bank served an integral role in the overarching fraud
that functioned under the banner of the Imperial Consolidated Group of Companies
("Group"), which included, among other things, several offshore investment vehicles.
Investors who placed funds with the Group were, generally, instructed to open an
account with the Bank through which their investments would flow to the ultimate
investment company and, from which, purported investment gains and earnings could be
accessed. In doing so, accounting entries were often used as a means to keep track of
inter-company balances and amounts due to or from depositors.
14. However, when the Group ultimately ceased operation and the Bank was ordered to be
wound up, the cash had essentially been stripped from the Bank as well as the various
related investment companies, leaving the offshore investment entities with little more
than a cluster of poorly documented cross-claims against one another, all of which were
of no value, as in the case of the Bank's claim against Commercial Lending Corporation
Limited ("CLCL") described below (the "Cross Claims").
15. Significant time and resources were necessary to be spent to determine the role of each
of the related Group companies, and indeed the Bank, in the larger fraud. It became
clear that the Bank was central to the Group's ability to perpetuate the massive fraud
that it did on a global population of victims; the Bank and related Group companies drew
depositors and investors from over 65 countries.
16. In order to determine the existence and validity of the Cross Claims, I agreed, along with
the Estate of IC Mutual Ltd., to jointly fund the Estates of Alpha Leeward and Windward
Ltd., ICS Placements Ltd., Commercial and Asset Backed Placements, and IC Mutual
Ltd. in the investigation of the Cross Claims. To that end, the Imperium Estate has
funded the above noted estates to the extent of $109,824.00 in aggregate.
Updates and Corrections to the Liquidator's Second Report:
17. At paragraph 6 of the Second Report, it was reported that the Bank appeared to have
available to it a claim against Commercial Lending Corporation Limited ("CLCL"), a
related BVI company, in the amount of $7,180,611. While no definitive statement was
made therein as to the merits of this claim, the Joint Liquidators of CLCL have since
rejected the Bank's claim in that estate, citing a lack of adequate supporting evidence.
third & final report of imperium bank limited - nov2 2012 final
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The anticipated yield from such a claim, if accepted, stated in the Second Report to be
"likely" and in the range of 5°4 to 7°/6, will thus not be received into the body of the
Bank's divisible estate property. The evidentiary deficits in the Bank's claim into the
CLCL Estate were similar to those which condemned the claims against the Bank of the
entities referenced in paragraph 11 hereof, and were primarily rooted in unreliable
accounting data maintained by the directors of the Bank and other Imperial Consolidated
Group entities in their respective books and records.
18. In Appendix "A" of the Second Report, being the Statement of Receipts and
Disbursements to January 31, 2010 (the "2010 Statement"), it was erroneously reported
that the Bank's "funds on hand" were $1,194,881.70. A combination of computational
errors, mis-categorization of certain receipts and disbursements, and the inadvertent
omission of funds held in trust by Grenada counsel contributed to the material misstatement of the funds on hand at the time.
19. Since filing the February 2010 report, and in preparation of this Third report, my staff
undertook an in-depth examination of the detailed transactions which underlie both the
2010 Statement and the Statement of Receipts and Disbursements current to November
2, 2012 (the "2012 Statement'). As a result of the examination process, my staff have
corrected the errors and omissions from the 2010 Statement and have prepared a
revised version of that schedule, which is attached hereto as Appendix "A" (the "Revised
2010 Statement'). The Revised 2010 Statement is intended to supersede the 2010
Statement.
20. The 2012 Statement, attached hereto as Appendix "B", reflects the distribution to
creditors referenced in paragraph 10 above. The Liquidator currently holds the sum of
US$ 70,634.09. This reserve has been kept back in order to meet accrued Liquidator
fees and disbursements as well as anticipated costs associated with closing the estate,
which costs are expected to include: responding to queries and issues from depositors
who have as yet been unable to clear their dividend cheques (there are presently 4
depositors in this position); preparing and filing the Final Report; and, attending in
Grenada to seek to discharge the Liquidator of his duties.
Respectfully submitted this 2nd day of November 2012.
On behalf of Marcus A. Wide Liquidator of Imperium Bank Ltd.
by his Duly Appointed Agent, James A. Pomeroy
third & final report of imperium bank limited - nov2 2012 final
-5APPENDIX "A"
REVISED STATEMENT OF RECEIPTS AND DISBURSEMENTS
As at January 31, 2010
REVISED
Receipts
Financial Asset Recovery
Return of Statutory Deposit
Interest Income
Sale of Physical Assets
Other Miscellaneous
Total Receipts
Disbursements
Creditor Distribution - Trust
Controller/ Liquidator Fees & Disbursements
Legal Fees & Disbursements
Contrribution to Investigation of Group Companies
Estate Administration - Storage Rental
Estate Administration - Grenada
Security
External Bookkeeping
Government of Grenada Remittance
Insurance
Service Charges
Computer Services
Utilities
Other Miscellaneous
Estate Administration - Transportation
Estate Administration - Advertising
Estate Administration -Vehicle Repairs
Total Disbursements
Excess of Receipts Over Disbursements
US$
1, 910, 004.64
122, 835.60
82, 983.38
22,453.42
100.00
2,138,377.04
506,231.86
358,895.37
264,127.03
109,824.00
33,864.21
18,300.57
11, 337.98
10,491.24
8,905.88
5,591.31
4,397.80
4,346.64
4,035.91
3,308.51
3,260.84
2,443.76
2,367.53
1,351 ,730.44
786,646.60
Represented by:
Cash in Bank
Funds Held in Trust - Grenada Legal Counsel
Total Funds on Hand
Less Administrative Reserve
665,493.80
121,152.80
786,646.60
(190,493.80)
Expected Balance of Funds Available to Distribute
475,000.00
THIS STATEMENT SUPERSEDES THAT WHICH WAS FILED WITH THE
LIQUIDATOR'S SECOND REPORT, DATED FEBRUARY 10, 2010
third & final report of imperium bank limited - nov2 2012 final
-6APPENDIX "B"
STATEMENT OF RECEIPTS AND DISBURSEMENTS
As at November 2, 2012
Receipts
Financial Asset Recovery
Return of Statutory Deposit
Interest Income
Sale of Physical Assets
Other Miscellaneous
US$
1,910,004.64
122,835.60
90,848.20
22,453.42
100.00
Total Receipts
2,146, 241.86
Disbursements
Creditor Distribution - Trust
Controller / Liquidator Fees & Disbursements
Creditor Distribution
Legal Fees & Disbursements
Contribution to Investigation of Group Companies
Estate Administration - Storage Rental
Estate Administration - Grenada
Note 1
Note 2
Note 3
Note 4
Security
506,231.86
484,508.41
475,810.67
386,213.92
109,824.00
33,864.21
18,300.57
11, 337.98
External Bookkeeping
Government of Grenada Remittance
Insurance
Service Charges
Computer Services
Utilities
Other Miscellaneous
Estate Administration - Transportation
Estate Administration - Advertising
Estate Administration -Vehicle Repairs
Total Disbursements
Excess of Receipts Over Disbursements
10,491.24
8,905.88
5,591.31
4,764.53
4,346.64
4,035.91
3,308.51
3,260.84
2,443.76
2,367.53
2,075,607.77
70,634.09
Represented by:
Cash in Bank
70,634.09
Less Administrative Reserve
(70,634.09)
Expected Balance of Funds Available to Distribute
See Notes Following Page
third & final report of imperium bank limited - nov2 2012 final
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APPENDIX "B" - NOTES
Note 1
The amount shown represents funds claimed by, and returned to depositors whose
funds were credited to their account during the period of the Controllership and which,
therefore, were deemed to be held in trust.
The gross amount of trust funds was $1,502,061.34, against which the Court ordered a
15% levy be charged by the estate. As approved by the Court, the remainder of
$995,829.48, comprised of the unclaimed funds of $770,520.28 plus the 15% levy of
$225,309.20, was applied to the costs of the Liquidation and the dividend paid to
ordinary creditors/depositors.
Note 2
Amounts shown reflect the combined professional fees and disbursements of the
Controller/Liquidator since being appointed as Controller April 25, 2002, through the
Liquidation period, until present.
Note 3
Creditor Distribution refers to the general dividend paid on a pro rata basis to ordinary
creditors/depositors.
Note 4
Amounts shown reflect the combined professional fees and disbursement of legal
counsel to the Controller/Liquidator since being appointed as Controller April 25, 2002,
through the Liquidation period, until present. The amount shown includes legal counsel
in Grenada, general legal counsel, and local counsel in the UK.
third & final report of imperium bank limited - nov2 2012 final