Disagreement over new plan
A row has developed among stakeholders of CLICO International Life Insurance Company (CIL) over a proposal – now before the High Court – by the Freundel Stuart administration to restructure the financially beleaguered firm.
A small group of CLICO policyholders and the members of the Eastern Caribbean Currency Union (ECCU), made up of the countries of the sub-regional grouping, the Organization of Eastern Caribbean States (OECS), have opposed the Barbados Government plan which calls for the establishment of a new insurance company on or before September 15, 2015. The purpose of this company is to manage the policies and associated liabilities of the policyholders listed on the Barbados register of CIL.
The plan, referred to as “Option One”, and yet to be approved by the High Court, provides for the formation of a company called New Life Investment Company Inc. (NLICO), which shall, on or before 31 October, 2015, issue bonds to CIL valued at about $34 million. NLICO and the Judicial Manager [JM] are to agree the real estate assets in Barbados to be transferred to NLICO by CLICO, which would then transfer the agreed real estate assets to the investment company before October 31, provided that the value of those assets is equal to the worth of the bonds.
The Judicial Manager, Deloitte Consulting, which had earlier asked the court to liquidate CIL due to a lack of financing from the Stuart administration, has since reversed its position after meeting with Government officials, and has withdrawn the request to liquidate the company.
The Judicial Manager has instead agreed to approve the restructuring plan, to be financed by the Barbadian taxpayer.
The court has been hearing evidence from the JM representative Patrick Toppin, who was being cross examined by Queen’s Counsel Ralph Thorne on behalf of the policyholders challenging the restructuring plan, and the attorney for the ECCU Sir Richard Cheltenham, QC, who has been working in association with Shelly Seecharan.
St Vincent and the Grenadines Prime Minister Dr Ralph Gonsalves has written his Barbadian counterpart, complaining of what he called a “Barbados-only” plan for policyholders, and reminding Stuart that the people of the OECS also invested in CLICO.
“. . . as a minimum, an independent assessment of the proposal is critical. This should, among other matters, examine the risks and costs of the proposal to policyholders in the Currency Union. Appropriate government arrangements, transparency and collaboration must be established with compensation as necessary, so that the interest of the Currency Union policyholders are properly considered in real-time and before key event occurs that may be irreparable,” Gonsalves told Stuart in his letter dated June 25, 2015,
“We remain open to discussion on this matter in an effort to find a solution palatable to all concerned, and are prepared to make representatives available to discuss the matter with [the] Barbados Ministry of Finance and Financial Services Commission,” the Vincentian leader added.
When contacted today, Gonsalves told Barbados TODAY he was giving Prime Minister Stuart more time to respond.
The representative body for policyholders here, the Barbados Investors and Policyholders Alliance (BIPA), which has been battling on behalf of investors and policyholders, has sanctioned the restructuring plan and has withdrawn its own court application against the JM.
BIPA’s head June Fowler told Barbados TODAY her organization has backed the Government plan because policyholders would be “made whole” and would not lose any benefits, if Government remained true to the provisions of the proposal.
The plan, would allow for the appointment of a BIPA representative to the Board of Directors of NLICO and a director on the board of the new insurance company, which is to be established.
The court has given the Judicial Manager $4.5 million in interim financing to sustain its operations between now and when the court process is complete.
Hearings are set for August 4, 5 and 6.