CLICO Barbados will bear brunt of CLICO Bahamas US$18M deficit

I have read in the newspapers that the deficit of CLICO Bahamas has been adjusted from US$9M (reported by Bahamian Prime Minister Hubert Ingraham) to US$18M (from the affidavit filed by the liquidator of CLICO Bahamas). Also, the liquidator is seeking to classify CLICO Guyana’s investment as an unsecured related party. If you are unfamiliar with finance, these developments may sound worrying. However, while this news is not good, there are enough silver linings for Guyanese to remain heartened.

Let me explain – first of all the shortfall is US$18M and Guyana’s investment is US$34M. So all things being equal, if Guyana is to bear the full brunt of the shortfall, we would get back US$16M of the investment.

Given that steps are also being taken to freeze assets in Guyana of the CL Financial group, including the US$15M loan that BOSAI owes to First Citizen’s Bank (formerly CLICO Investment Bank) means that a proactive approach is being taken to protect policyholders.

However, Guyana will not bear the entire shortfall being suffered by CLICO Bahamas. In liquidation, third-party creditors, secured and then unsecured are repaid first followed by secured related-parties and then unsecured related-parties (which the liquidator is classifying Guyana as) and finally, the shareholders.

Guyana is far down on the scale of beneficiaries to receive funds from the liquidation but definitely not last. It is the parent company of CLICO Bahamas, CLICO Barbados, and their shareholders who will bear the brunt of the shortfall.

This means that Guyana will probably get back a large chunk of its investment.

However, given that the US$73M investment CLICO Bahamas made in real estate is not currently marketable, we will have to wait to get back our money. This is the only serious downside to these new developments
PREITY SEEMANGAL

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