The Companies Act, 1992 Ch 308 v The Pacifico Global Advisors Ltd

• Jurisdiction: Bahamas
• Judge: WINDER J
• Judgment Date: 01 January 2022
• Court: Supreme Court (Bahamas)
• Docket Number: 2019/COM/bnk/00077

IN THE SUPREME COURT

Before

Hon. Mr. Justice Ian R. Winder

2019/COM/bnk/00077

In the Matter of The Companies Act, 1992 Ch 308

and

In the Matter of The Pacifico Global Advisors Ltd

Appearances:

Simone Morgan-gomez With Philisea Bethel For The Official Liquidator

Gail Lockhart-Charles QC with Lisa Esfakis for the Liquidation Committee

Gawaine Ward with Aramantha Hepburn for the Securities Commission Krystal Rolle QC with Kendrea Demeritte for an interested party

RULING

WINDER J

These are the several applications of the Official Liquidator (OL), relative to costs and expenses arising from the liquidation. The three applications are brought by separate Summons, all dated 25 June 2021.

1 The three applications are the following:

• (1) An application to pay out of the assets of PGA fees and disbursements as reflected in the statement of accounts of the OL and its agents and attorneys, (‘the Fees Application’)

• (2) An application for the payment of 80% of the fees and disbursement of the OL and his agents (“the Payment Application”).

• (3) An application for the approval of the deduction from trust assets sums with respect to fees and expenses using an allocation formula advanced by the OL as follows:

  • (a) General Liquidation costs being allocated to the Trust Assets at 22% and a balance of 78% being allocated to the PGA propriety assets;

  • (b) Non Sub Fund (segregated accounts with Lyford Diversified Global Fund, SAC) liquidation costs being allocated to the Trust Assets in proportion to their holding value, and

  • (c) Global Opportunities EUR NX Sub Fund (“NX Sub Fund”) liquidation costs being allocated to the NX Sub Fund Assets only.

  (“the Allocation Application”)

Background

2 PGA is a Bahamian Company which was incorporated on 30 September 2011. PGA was registered and licensed by the Securities Commission of The Bahamas (SCB) from 2012 to 2014 to provide investment advisory services and discretionary investment management services to its clients. On 11 September 2015 the SCB issued to PGA a broker-dealer license and thereafter the principal activities offered to clients included, the managing of securities, dealing as agent or principal, arranging deals in securities and advising on securities.

3 PGA, as investment manager and custodian on behalf of its clients, maintained bank accounts in PGA's name at various Custodian Banks (“Trust Accounts”).

4 In 2015 PGA was introduced to a new trading platform by Deltec Bank & Trust Limited (“DBT”) and Deltec Fund Services Limited which allowed PGA's clients to invest in various segregated accounts through the Lyford Fund, an open-ended investment fund incorporated in The Bahamas.

5 PGA was placed in voluntary liquidation on 2 October 2019. By Order of this Court dated 28 October 2019 the liquidation became supervised by the Court (with the commencement date of the liquidation set at 2 October 2019).

Fees Application

6 The OL has applied for the approval of the fees as indicated in the statements. The Liquidation Committee objects to the costs in a document titled “ points of dispute of the liquidation committee on the official liquidators' costs application”. They challenge the reasonableness of the fees incurred by the liquidator. They seem to suggest that the work of the liquidator ought to have been simply to return assets held in custody. They place primary emphasis on a 20 September 2019 letter of the former CEO of PGA written to the Securities Commission when seeking to wind up PGA. According to the CEO, the only remaining objective of PGA is to return assets held in custody to its clients.

7 Respectfully, the role of the OL could not be so limited to blindly following the directive of the PGA management which oversaw the demise of the company. The duties of the OL is set out in Section 205 of the Companies Act (as amended by the Companies Winding Up Amendment Act 2011). Section 205 provides:

205. Duties, functions and powers of official liquidators.

(1) The duties and functions of an official liquidator include-

• (a) collecting, realizing and distributing the assets of the company to its creditors and, if there is a surplus, to the persons entitled to such assets in accordance with this Act; and

• (b) investigating and reporting to the company's creditors and contributories upon the affairs of the company and the manner in which it has been wound up.

(2) The liquidator shall, subject to this Act and the Rules, use his own discretion in undertaking his duties and a liquidator also has the other duties imposed by this Act and the Rules and such duties as may be imposed by the court.

(3) The official liquidator has the powers necessary to carry out the duties and functions of a liquidator under this Act and may-

• (a) with the sanction of the court, exercise any of the powers specified in Part I of the Fourth Schedule; and

• (b) with or without that sanction, exercise any of the general powers specified in Part II of the Fourth Schedule.

(4) The exercise by the liquidator of the powers conferred by this section is subject to the control of the court, and subject to subsection (6), any creditor or contributory may apply to the court with respect to the exercise or proposed exercise of such powers (hereinafter referred to as a “sanction application”).

(5) In the case of-

• (a) a solvent company, a sanction application may only be made by a contributory and the creditors shall have no right to be heard;

• (b) an insolvent company, a sanction application may only be made by a creditor and the contributories shall have no right to be heard; and

• (c) a company whose solvency is doubtful, a sanction application may be made by both contributories and creditors and both...