Have we seen the end of business magnate, Lawrence Duprey?
This question has been on the lips of employees of CL Financial after the High Court on Friday ordered that the once powerful company, is to be liquidated.
In an oral decision, Justice Kevin Ramcharan ruled in favour of the Government who was seeking to have CLF wound-up in its efforts to recover a $15 billion debt to taxpayers as part of the 2009 bailout of four of the company’s subsidiaries.
As a result of the court’s ruling, CLF’s operations will now be fully placed in the hands of the two liquidators appointed in July.
They will be responsible for management of the company and its assets during the period of winding up.
Justice Ramcharan said there could be no doubt CLF was unable to pay its debts and was insolvent.
He also said the majority shareholders of the company, who were shut out of court proceedings after failing to show they had sufficient interests to be heard in opposition to Govt’s petition, did not credibly establish that CLF was solvent.
Ramcharan referred to action of the shareholders who in July abandoned a move to change the composition of the government- controlled board, saying the State’s petition for liquidation was a ‘possible consequence’ of that.
According to the judge, based on the principles of granting the order being fair and just, the Government as the major creditor which sought to have CLF liquidated, established its prima facie rights for liquidation of the company.
Ramcharan said the liquidation to wind up a company with the history of CLF could not be taken lightly, but based on cold evidence advanced by the State, the court had no option but to grant the petition.
In her submissions, Deborah Peake, SC, referred to evidence of Finance Ministry Permanent Secretary, Vishnu Dhanpaul, – who stated that CLF was not only cash flow insolvent but also, balance sheet insolvent.
Peake pointed to evidence of the provisional liquidators appointed by the Cout of Appeal in July and that of independent chartered accountant, Colin Soo Ping Chow, both of whom noted that CLF’s liabilities were far greater than its assets. According to Soo Ping Chow, CLF’s capital was completely eroded and there was a $4.2 billion deficit, which did not take into account the $15 billion owed to Government.
CLF’s management accounts, dated June 30, show a shareholders’ deficiency of $3.44B, before taking into account obligations to Government as part of the 2009 bailout agreement.
In its winding-up petition filed on July 11, government claimed that the company’s level of insolvency still poses a systemic risk to the country’s financial system and after eight years, it will not recover to a satisfactory state of solvency. As the principal creditor, Government has the majority of the directors on the board and sought to have the conglomerate liquidated to recover the debt owed to taxpayers.