B$40m for CLICO’s Bahamas creditors
Thursday May 05 2011 | 04:51 AM

CLICO (Bahamas) liquidator is likely to recover around $40 million for Bahamian creditors of the insolvent insurer, having reached a preliminary sales agreement that, if concluded, will see the real estate project accounting for 63 per cent of its assets generate $50 million in gross proceeds.

US court documents obtained by Tribune Business show that Craig A. 'Tony' Gomez, the Baker Tilly Gomez accountant and partner, has reached an agreement to sell the remaining 400-plus acres of Florida's Wellington Preserve development to J-5 Wellington Preserve, a Colorado-domiciled company, for $40 million.

Together with an earlier deal to sell a 102.74-acre Wellington Preserve land parcel to Zacara Farm LLC, a Delaware-incorporated company, for $10 million, Mr Gomez appears on course to realise $50 million in total gross proceeds from the sale of Wellington Preserve.

With his Chapter 11 plan for reorganising Wellington Preserve thought to be close to receiving the approval of the south Florida district bankruptcy court, Mr Gomez will likely use the $10 million raised from the Zacara Farm sale to pay-off all the project's US-based creditors.

As a result, once closing costs are accounted for, the $40 million from the sale to J-5 Wellington Preserve will be repatriated to the Bahamas to help satisfy the demands of CLICO (Bahamas) creditors. In a previous court filing referring to the Zacara Farm sale, Mr Gomez said: "The $10 million purchase price is enough to pay all closing costs and all claims which have been either listed or filed, or for which mechanic's liens have been filed.

"The only creditors who would not be paid in full from the first closing are CLICO Enterprises, the affiliate and proponent of the plan, and the disputed claim of the Internal Revenue Service."

While the sums involved may seem far short of 100 per cent recovery for the insolvent insurer's Bahamian creditors, Mr Gomez has been hampered by the depressed state of the Florida and US real estate market, due to the credit crunch and subsequent recession. While he could arguably hold out for a better deal, this would postpone achieving a successful sale - and recovering anything for creditors - for many years.

The Florida-based real estate project's sale is one of two key objectives Mr Gomez must accomplish to really get the 'ball rolling' on CLICO (Bahamas) liquidation. The other is to obtain Insurance Commission and Supreme Court approval for the sale/transfer of the insolvent insurer's remaining policy portfolio to another carrier, likely Colina Insurance Ltd. That, too, is thought to still be progressing, albeit slowly.

Meanwhile, Mr Gomez's latest report to the Bahamian Supreme Court on the CLICO (Bahamas) liquidation showed the insurer still faced a $14.58 million solvency deficiency, with total assets standing at $45.543 million and total liabilities of $60.122 million.

And he warned Bahamian policyholders and creditors: "The current real estate market in the United States remains extremely soft, and it is very unlikely that I will be able to realise a more than favourable price for the Wellington property to guarantee sufficient funds for me to satisfy creditors of CLICO (Bahamas)."

As a result, Mr Gomez said he was proceeding with efforts to force the insurer's Trinidadian parent, CL Financial, to honour a $58 million guarantee made in favour of the Bahamian insurer.

Meanwhile, the liquidator said another 128 CLICO (Bahamas) policies had been surrendered between July 1, 2010, and December 31, 2010, as "policyholders are of the view that the process is taking too long" with respect of the portfolio transfer to Colina Insurance Company.

Mr Gomez also noted that there were differences between the inter-company/related party balances contained in CLICO (Bahamas) accounting records and those of its affiliates.

Nothing that there was "a significant level" of activity between CLICO (Bahamas) and its affiliates, Mr Gomez added: "After further review of the inter-company and related party balances, I have preliminarily concluded that these balances are unlikely to be collected. In due course, it iss probable that provisions may be needed to reflect the uncollectible status of these balances as reported in the unaudited financial statements."