Stanford International Bank liquidator faces financial crisis of its own
By OffshoreAlert, February 3, 2010
The liquidator of Allen Stanford's Antigua-licensed Stanford International Bank is facing serious financial problems of its own as a result of its inability to collect liquidation fees.
The difficulties at British-based accounting, tax and business advisory firm Vantis Plc are so chronic that they "cast significant doubt on the group's ability to continue as a going concern", according to Vantis' auditor, Ernst & Young.
Ernst & Young delivered its dire warning on January 29, 2010 in its report on Vantis' interim results for the six months ended October 31, 2009, during which Vantis, whose shares are listed on London's Alternative Investment Market, reported an after-tax loss of £9.9 million.
In explaining the problems collecting fees for liquidating SIB, Vantis' Chairman, Mike Wheeler, stated: "As a result of a freezing order issued by a US Court, legal appeals by a US appointed receiver and the delay in realisation of significant property assets, it was not possible to receive payment of fees during the half year period.
"In July 2009, the High Court in England & Wales found that the Centre of Main Interest for UK SIB assets should be in Antigua and Barbuda and that as a consequence, these assets fall under the control of the joint liquidators. The US appointed receiver appealed and a decision from the UK Court of Appeal is awaited.
Separately, a decision from the financial regulator in Switzerland is also awaited on whether the joint liquidators or the US receiver should have control of SIB assets located there.
"The Group is confident that outstanding time costs will be recovered in due course but the various legal actions mean that timing is uncertain."
The going-concern warning came less than five months after a judge in Quebec, Canada refused an application to recognize the status of Vantis employees Nigel Hamilton-Smith and Peter Wastell as liquidators of SIB, citing their "reprehensible", "unacceptable" and "inexcusable" conduct in Canada. In a ruling on September 11, 2009, Justice Claude Auclair, sitting at Quebec Superior Court, determined that the liquidators had acted illegally in Canada, accused them of lying and commented that "Vantis does not deserve the trust of the Court".
Vantis' conduct has led to a group of creditors to seek to have them removed as liquidators in an application that is pending before Antigua's High Court.
Two attorneys for creditors of Stanford International Bank, Martin Kenney, of British Virgin Islands-based law firm Martin Kenney & Co., and Edward H. Davis, Jr., of Miami-based law firm Astigarraga Davis, will discuss the problem of liquidators being more interested in incurring fees than providing value to creditors, using the Stanford liquidation as a case study.
The session is entitled Insolvencies and Receiverships Gone Wrong: Fee Pigs and 'The Dripping Roast' and is one of 28 unique sessions being offered at the 8th Annual OffshoreAlert Financial Due Diligence Conference, in association with Grant Thornton, which will take place at The Ritz-Carlton, South Beach in Florida on May 2-4, 2010.
Kenney and Davis are the principal architects of the many 'Fraud & Asset Recovery' sessions for the conference, which will also concentrate on two other principal themes: 'Money Laundering & Compliance' and 'Investigation & Intelligence'.
Register Now to reserve your seat for the premier educational & networking event about Offshore Financial Centers & Serious Financial Crime.
Insolvencies and Receiverships Gone Wrong: Fee Pigs and 'The Dripping Roast'
It has been said of insolvency professionals that the following sentiment is all too common:
“The sole purpose of an IP is to use up in fees and costs everything that they can recover, and then go down the pub and boast to all their mates about it.”
This problem is exacerbated where the Universalist approach to trans-border insolvency is rejected; and the old territorial fight for assets between competing officeholders takes root. The current-day poster child for this will be examined – Stanford International Bank.
- Edward H. Davis, Jr., Astigarraga Davis (Miami, USA)
- Martin S. Kenney, Martin Kenney & Co., Solicitors (BVI)
- Christopher J. Redmond, Husch Blackwell Sanders, (Kansas)
- Nick Wood, Grant Thornton (UK)
Click here to view all sessions in the Fraud & Asset Recovery track.
