CLICO restructuring to go ahead
Anxious CLICO policyholders could this week be handed another option to recover their investments in the collapsed insurance company.
Minister of Finance Chris Sinckler revealed during his budget presentation that when the matter returns to the High Court this week, the Ministry of Finance and the new company set up to oversee CLICO’s operations, New Life Investment Company Inc. (NCLICO), will present fresh affidavits to the court to avoid liquidation.
According to Sinckler, the two parties will be asking the court to favour recommendations by the Judicial Manager, Deloitte Consultancy Limited (Deloitte), to support the restructuring plan put forward by his ministry and supported by NLICO.
“This option can derive significant benefits for policyholders to be returned to their position of near to full policy benefits if it is successful. In addition, an operational insurance company can in the future also create a solution for the policy holders in the Eastern Caribbean,” Sinckler said.
“Barring no objection from the Court, it will mean that we can initiate the process of bringing a successful and orderly end to this phase of the restructuring of the company and the pain and inconvenience of thousands of policyholders and investors in that company while maintaining the integrity and stability of the financial system.”
Back in June 2013, Deloitte recommended the Barbados First restructuring plan which essentially was a resolution to keep CLICO going. The plan also called for Government funding to support the proper establishment of the statutory fund.
Sinckler disclosed that Cabinet had approved the restructuring solution in March last year and five months later it gave the nod for the NLICO to be formed. It was incorporated on January 26, 2015 as a regular business company and is fully operational with its own Chairman and Board of Directors.
Sinckler said efforts have been ongoing to finalize the implementation details of the proposed resolution and since then the Judicial manager had revised figures on the immediate cash requirement to provide the working capital the insurance company would need to operate while the restructuring took place.
“The initial cash injection required is now projected by the JM [Judicial Manager] to be BDS$52 million. NLICO has arranged this funding and it will be made available following the decision of the court.
“The cash injection would allow the company to satisfy the immediate cash needs of the
Sinckler noted that the Barbados Investors and Policyholders Association (BIPA) had also filed an affidavit which does not support liquidation but rather proposed a resolution option for the insurance company to remain as a going concern with a third party investor.