Re Caledonian Bank Ltd

JudgeWinder, J.
Judgment Date19 May 2016
CourtSupreme Court (Bahamas)
Docket Number2016/COM/com/00031
Date19 May 2016

Supreme Court

Winder, J.


Caledonian Bank Limited, Re:

Sophia Rolle-Kapousouzoglou with Olivia Robinson-Moss for the petitioner.

Company Law - Winding up — Parallel winding up proceedings — Insolvent foreign company — Assets held in Bahamas — Whether court ought to exercise discretion to wind up insolvent company.

Winder, J.

On 26 April 2016, I acceded to the Petition of Caledonian Bank Limited to be wound up in The Bahamas and for the winding up to be ancillary to the winding up now taking place under the supervision of the Grand Court of the Cayman Islands. I promised to put my reasons in writing and I do so now.


Caledonian Bank Limited (“Caledonian”) is a bank incorporated under the laws of the Cayman Islands. It is licenced, headquartered in and maintains its centre of main interests in George Town, Grand Cayman. According to the evidence:

  • a) Caledonian's principal business included issuing financial instruments and providing fiduciary and administrative services, including custody services to customers of its non-debtor broker-dealer affiliate, Caledonian Securities Limited.

  • b) Caledonian accepted deposits from customers at fixed rates for various periods and sought to earn an interest margin by placing these funds with creditworthy counterparties at higher rates. Caledonian carried on business as lender with various counterparties, some of which are in The Bahamas.

  • c) During the course of its operations Caledonian entered into numerous lending arrangement operations which extended to providing financing to foreign investors in The Bahamas. Several properties were held as security for the loans made by Caledonian. The value of the assets of Caledonian within The Bahamas is estimated to be approximately $16 million.

  • d) As of 31 January 2015, Caledonian's total assets amounted to approximately USD 585 million, approximately USD 388 million of which was cash held on deposits with other financial institutions or liquid fixed income investments. At that time, Caledonian had total liabilities of approximately USD 560 million, approximately USD 520 million of which was repayable to depositors on demand.


On 6 February 2015 the United States Securities and Exchange Commission (SEC) commenced proceedings against Caledonian and others in the State of New York, obtained a temporary restraining order freezing all of the US based assets of Caledonian and ordered it to repatriate all of its stock sales to the United States. As news spread of the US proceedings Caledonian's customers began requesting the withdrawal of funds from their accounts. The resulting liquidity crisis caused the company to negotiate a modified freezing order with the SEC, but nonetheless, on 9 February 2015 Caledonian continued to receive substantially larger numbers of withdrawal requests rendering it cash flow insolvent. Caledonian suspended operation of all its services, including accepting deposits and processing withdrawals, on the same day.


On 10 February 2015 the Cayman Islands Monetary Authority exercised it regulatory powers under the Cayman Islands Banks and Trust Companies Law and appointed Keiran Hutchinson and Claire Loebell as controllers of Caledonian.


On 17 February 2015 a winding-up petition was presented by (‘CIMA’) for the winding up of Caledonian. On 23 February 2015 the Grand Court of the Cayman Islands ordered that Caledonian be wound up and that Keiran Hutchinson and Claire Loebell be appointed as Joint Official Liquidators of Caledonian. At the date of the Grand Court's Order, Caledonian had approximately 1,268 customers and nearly 1,900 active accounts.


Subsequent to the Grand Court's Order for the winding up of Caledonian in the Cayman Islands, the Joint Official Liquidators applied to this Court by an Amended Petition dated 6 July 2016 for their recognition at common law and under the statutory provisions of the Companies (Winding-up Amendment) Act, 2011. In a written decision dated 9 February 2016, Moree, J. (Ag.)dismissed the Amended Petition and declined to grant the relief sought by the Liquidators for recognition.


There are a number of assets of Caledonian in The Bahamas, which include mortgages and a number of outstanding loans within this jurisdiction with respect to various borrowers namely, Blazing Saddles International Limited, Cal-Global (Bahamas) Inc., Peninsula International Holdings Limited, Kilkee House and three participation loans for Sterling Asset Management Ltd.


The Petition of Caledonian was filed on 5 April 2016 and sought, inter alia, an Order that it be wound up as a foreign company pursuant to Section 185(d)(i) (ii) of the Companies (Winding-up Amendment) Act, 2011 (‘The Act’) on the ground, inter alia, that it is insolvent.


The Petition is supported by:

  • a) Verifying Affidavit of Claire Loebell filed herein on 11 April 2016;

  • b) Affidavit of Keiran Hutchison filed herein on 11 April 2016;

  • c) Affidavit of Tiffany Norris-Pilcher filed herein on 12 April 2016; and,

  • d) Affidavit of Chizelle Cargill filed herein on 25 April 20166.


The petitioner says that in the wake of the decision of Moree, J. (Ag.) to refuse recognition of the Cayman appointed Liquidators, Caledonian pursued the ancillary winding-up as the only alternative means whereby it could gain access to the property within this jurisdiction. They also say that doing so will enable the Court to appoint a liquidator here in order to collect the assets and wind-up Caledonian's affairs.


Section 185(d)(i)(ii) of the Act provides that

    The court has jurisdiction to make winding up orders in respect of- (a) an existing company; (b) a company incorporated and registered under this Act; (c) a body incorporated under any other law; and (d) a foreign company which- (i) has property located in The Bahamas, (ii) is carrying on business in The Bahamas, or (iii) is registered under Part VI.

Section 183 of the Act defines a “foreign company” as “anybody corporate incorporated outside The Bahamas.”

Section 186 of the Act provides:

    A company may be wound up by the court if- (a) the company has passed a resolution requiring the company to be wound up by the court; (b) the company does not commence its business within a year from its incorporation, or suspends its business for a whole year; (c) the company is insolvent; (d) the members are reduced in number to less than two; (e) the court is of the opinion that it just and equitable that the company should be wound up; or (f) a regulator petitions for the winding up of a company over which it has regulatory authority and whose licence or registration has been suspended or revoked.

In the case of In the Matter of BC Capital Group International S.A (In Voluntary Liquidation) 2012/COM/ COM/0087 this Court, per Barnett, C.J., confirmed the jurisdiction under section 185 (d) of the Act to wind up a foreign company. In BC Capital Group, the Court sanctioned the winding up of two Panamanian companies which held considerable assets in The Bahamas. (See also Picard and Bernard L. Madoff Investment Securities LLC (In Liquidation) v. Primeo Fund (in liquidation) [2013] 1 C.I.L.R. 164, a Cayman case based upon a similar legislative framework.)


On the evidence therefore, I found that the Court clearly had the jurisdiction to wind up Caledonian as it was an insolvent foreign company with property located in The Bahamas.


Further, in accordance with Section 190(1)(a) of the Act I was satisfied that Caledonian itself may move for its winding up. Section 190(1)(a) provides that:

    (1) An application to the court for the winding-up of a company shall be by petition presented either by- (a) the company; (b) any creditor or creditors (including any contingent or prospective creditor or creditors); (c) any contributory or contributories; or (d) subject to subsection (4), a relevant regulator pursuant to the regulatory laws.

The common law has long since recognized the existence of parallel winding up proceedings in multiple jurisdictions where a company holds assets or does business. In Re Matheson Brothers Ltd (1884) 27 Ch. D. 225, one of the earliest cases of parallel winding-up proceedings, Kay J. stated at page 230,

“the mere existence of a winding-up order made by a foreign court does not take away the right of the courts………. to make a winding-up order here…”.

Further, in Re Vocalion (Foreign) Ltd. [1932] 2 Ch. 196, Maugham, J. stated at page 206,

“there may be winding-up orders made in the foreign country where the company has carried on business and possesses assets. The view of this court is that the principal winding-up should be in the principal domicil of the corporation, and that any other winding-up order should be ancillary to the principal winding-up.”


The leading authority in the modern era, on the concept of an ancillary liquidation, is the case of Re Bank of Credit and Commerce International S.A. (No. 10) [1997] CH. 213. At page 240, Sir Richard Scott, V-C, stated,

“There is, none the less, a long standing line of authority describing an English liquidation as an “ancillary” liquidation where the company concerned is a foreign company in liquidation in its country of incorporation…”

Scott V-C went on to outline the following principles at page 246,

  • (1) Where a foreign company is in liquidation in its country of incorporation, a winding-up order made in England will normally be regarded as giving rise to a winding-up ancillary to that being conducted in the country of incorporation.

  • (2) The winding-up in England will be ancillary in the sense that it will...

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