The State has been given the all clear to appoint joint provisional liquidators to preserve the assets of CL Financial (CLF) as it seeks to recover a $15 billion debt following its bailout of the conglomerate in 2009.
Justices of Appeal Peter Rajkumar, Charmaine Pemberton and Andre Des Vignes unanimously agreed that Justice Ramcharan erred in law when he dismissed the application.
In the ruling which was delivered by Rajkumar, the judges said they were satisfied with the arguments put forward by the State on the need to have the liquidators appointed as it seeks to recover the $15 billion debt.
With the ruling, there is now a freeze on the company’s assets and it is no longer allowed to continue trading until the hearing and determination of another action filed by the State to wind up the company. That hearing was scheduled to be heard by Justice Ramcharan on Tuesday but was adjourned to Wednesday because of the appeal.
Justice Ramcharan had ruled that the application was made prematurely since the State was unable to offer proof that if the composition of the board had changed it would have disposed of the assets to the detriment of the State.
The Government has bailed out CLICO and CL-related companies to the tune of more than $23 billion but to date, just about $7 billion has been repaid.
The application to have liquidators appointed came after the State was given notice that non-government shareholders were seeking to have a majority membership on the company’s board of directors, and effectively take control of the company from Government.
The shareholders were initially seeking to have two more non-government shareholders, Carlton Reis and Kirk Carpenter, appointed to the board during a special general meeting on Tuesday afternoon.
Once they had gained control from the Government, the board would have sought to continue trading in an attempt to make profits to repay the State. However, the Government contended that the assets have less monetary value than the debts owed and there is a strong possibility that if the company were to continue trading, it may incur more losses and the debt may never be repaid.
At the start of the hearing, Jeremie submitted that the application to have the liquidators appointed was no longer urgent as was being argued by the State, since both Reis and Carpenter had decided they would not present themselves at Tuesday’s meeting to be appointed as directors on the board until no earlier than the end of October.
Therefore, he said, Government remained in control of the board until then.
“There is no immediate or imminent threat of the composition of the board changing over the next three month, therefore, there is no need for the court to grant the order for provisional liquidators to be appointed. The government is and will remain in control until at least the end of October.”