IN THE GRAND COURT OF THE CAYM P.D ON
HOLDEN AT GEORGE TOWN， GRAND
CAUSE NOS. 284 AND 286 OF
189
IN THE MATTER OF：
BANK OF CREDIT AND COMMERCE INT
(OVERSEAS) LIMITED
CAL
AND
CREDIT AND FINANCE CORPORATION 11
IAN ISL
AND IN THE MATTER OF：
AYMA
INTERNATIONAL CREDIT AND INVESTI
199 ANY
(OVERSEAS) LTD.
AND IN THE MATTER OF：
THE BANKS AND TRUST COMPANIES
NT CO LIMI
AND IN THE MATTER OF：
THE COMPANIES LAW (REVI
146
Yester day I gave leave for the liq
of Bank
Credit and Commerce International (Over
LAW 1d. ("BCCI
Over seas") and Credit and Finance Corpo) ) Limited ("C")
to execute， with one exception， a serie
sements wh
have come to be known as the Majority sdato
er Agreements
and the Pooling Agreements， and to do e
reho
seas necessary to
implement them fully and comply with th ration
ul. The
exception was the agreement containing 5 of 2
as and
conditions on which the Majority Sharehe
hand the
principal BCIT companies' relationship
very th
Credit and Investment Company (Overseas CI
with I
ICIC
Over seas") and its related companies， t.Ltd.
the group， wo
uld
be resolved.
The reason for that was that I wan gro
ear the
specific submissions relating to the I Cited to
which we
due to be heard immediately after those relating to BC
Overseas and CFC before making a decision. That has n
happened, and in view of the judgment which I shall be
delivering later this morning in relation to the ICIC
I extend the leave given yesterday to include the ICIC
agreement.
The intent of the Majority Shareholder Agreements
together, is that the Government of Abu Dhabi will make
available, subject to conditions, for distribution to
rdinary unsecured creditors of the principal BCCI comp， CI
The main agreement is a Contribution Agreement dealing
those funds which will be available to the creditors o，
principal BCCI companies who accept the offer， one of group
terms of which is that they release any claims which the funds
nave against the Government of Abu Dhabi， the Majority
Shareholders， and related persons. The principal BCCI， take
companies and the Government of Abu Dhabi， the Majority with
shareholders， and related persons will also enter into the
wide-ranging mutual releases， and the Abu Dhabi parties
be admitted as creditors in the liquidation of BCCI Overlay may
and BCCI SA.
Consideration of the effect of the mutual releases
fundamental to the assessment of the Abu Dhabi offer. I
going further into that， I make one general comment. I re
without saying that this Court is exercising its own
independent jurisdiction in this matter， and I was sat s
that Sections 162 and 163 of our Companies Law provided
jurisdiction to make the orders and directions which I t gots
make. Indeed， no submission to the contrary was made. did
In reaching that conclusion， I was assisted， not o
the submissions made by Mr. Pascoe on behalf of the
by
liquidators， but by those made at my request by Mr. Den
Amicus Curiae， a friend of the Court. Nevertheless， I n as
to recognize， as I am glad to do， that these agreements
only
part of an immense international effort to salvage what
are
be salvaged for the creditors out of the BCCI debacle.
can
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3
The document discusses the complexities and challenges in the liquidation process of BCCI SA and BCCI Overseas, highlighting the need for a more orderly and efficient approach to processing claims and distributing assets to creditors. The text emphasizes the importance of considering the best interests of the creditors and the need to unravel the tangled affairs of these entities in a manner that is both fair and transparent.
The document also mentions the principal liquidations in the Cayman Islands and Luxembourg, which are ancillary to the main liquidations of BCCI Overseas and BCCI SA. It notes that BCCI Overseas has 63 branches in 28 countries, while BCCI SA has 47 branches in 13 countries. The text further elaborates on the extent of the problem and the extent to which the proposals of BCCI SA and BCCI Overseas are shared.
The document then shifts focus to the approach of the liquidators, particularly the liquidator of BCCI SA, and the mutual releases between the liquidators and the Abu Dhabi parties. It mentions that the legal advice given to the liquidators is confidential and should not be canvassed in public. The text also discusses the strengths and weaknesses of the claims and the mutual releases, which have not yet been achieved.
The document concludes by stating that anyone who reads the liquidators' report will see that court proceedings in respect of these mutual claims would be likely to be protracted (five to ten years) and that the outcome is uncertain. It also mentions that the proposals are estimated to be enormously expensive and that there is an uncertainty as to both liability and enforceability of the recovery.
negotiations.
affidavit evidence produced by the Abu
authorities in England was read to me.
It was that t
Majority Shareholders were themselves the principal v
of the fraud within the BCCI group, and that they hav
suffered loss exceeding $6,000 million.
They point o
no one else has offered to make any substantial payme
the general body of creditors. They have repeated th
commercial terms of the proposals are not negotiable.
o
will not increase the amount of their offer.
I do nom
believe that the door is open to further negotiations
Dhabi
those lines in realistic terms.
The second alternative, if the proposals are rej
for
is court proceedings by the liquidators against the A
he
parties. In that event, distribution to creditors is out that
They
unlikely to be made for years. The latest estimate it
nt
the assets of the principal BCCI companies are expect
at the
realise about $1.301 million. All this money would hnal
be retained by the liquidators to meet the $2.2 thousand
million proprietary claims being asserted by the Abu D
bu D
authorities. If those claims succeeded, the companies to
well be wiped out. At best, the liquidators could mal that
distribution until after the claim has been resolved, and
If the Abu Dhabi offer is accepted and its contrib
ave to
of some $1,500 million is included, the likely dividend
becomes a little over 32 percent with the first distr
ke no
to depositors probably being made by the middle of ne
5 cou
The liquidators have also applied for a set of
ibuti
directions which I will call, as they have, the "Cayma
year
Directions". The primary object of the Cayman Distributio
to provide for claims in the liquidation of BCCI Overs
15
be dealt with in accordance with a defined set of rule
to
the absence of the Court having made its own rules gov
rs. In
the winding up of companies, the matter falls to be dening
tons
with in accordance with the general practice of the Cc
seas
In the present, case I accept the proposal that the rules,
alt
contained in the Insolvency Rules 1986 of England and
iles
Wa
of
6
insofar as they relate to winding up of companies by
the High Court of Justice in England, should apply to
winding up of BCCI Overseas by order of this Court, to
extent that they are not inconsistent with the Company
In delivering his directions on the 2nd of March he
and in his judgment of the 8th of June, the Vice-Charth
considered whether or not directions should be given
English liquidators to convene a meeting of the credi
nd
He considered the practical problems arising in the ce
rs
of a far from ordinary liquidation involving large num
order
creditors located in different jurisdictions. In parhe
he considered the problem of the timing of such a meet
against the background of the timetable laid down by
Majority shareholder agreements.
The same sort of practical problems would arise
attempting to convene meetings of creditors of BCCI O
for the purposes of Section 104 of the Companies Law
(Revised). However, by the same Section the Court is
entitled to have regard to the wishes of creditors as
the
to it by any sufficient evidence. The establishment
of creditors will provide a convenient mean in
this purpose. In addition, the formation of such a c
will bring the liquidation of BCCI Overseas in the Cayman
Islands into line in this respect with the proceeding
relating to BCCI SA in England and Luxembourg. An or
is for
the establishment of such a committee will be includemitt
of a
Cayman Directions.
At the hearing yesterday the Majority Shareholder
om
other creditors were represented and expressed willinder fo
and desire to serve on the creditors committee. The gnass
direction to be included in the Cayman Directions is
direction that a committee of creditors should be for a
matters relating to its constitution, function, and
membership being adjourned for consideration in chamb
that notice of that hearing should be served on the co th
to whom I have referred. That is to say, in addition redito
Majority Shareholders Visa International， National Bar
Oman Ltd.， Petroservicios Ltda.， and BCC(MISR) SAE.
other respects， the Cayman Directions were approved in
accordance with the draft directions sought and set out in their report dated the 24th of March. That report has been quite widely circulated and was extensively referred to during the hearing yesterday.
Appendix 1 of the liquidators' report dated 24th of May 1992.
I have not attempted to go exhaustively into the matter for and against the proposals which the liquidators have
proposed is in the best interests of the creditors as a whole. It is scant comfort to them to be told that half a loaf is better than no bread， but the alternative is a fact of life， and， in my judgment， a gamble against the odds. It has
result through negotiation or litigation. Like the Vice-Chancellor in England， I attach ligamb. The
importance to the fact that only creditors who relinguish a
claim may themselves have against the Abu Dhabi better
proposals now converts that possibility into a certainty the
The Abu Dhabi Government's offer is conditional on acceptance by creditors with admitted claims totalling $7，000 million have
The Abu Dhabi Government can waive this high figure， pha
without the liquidators' consent if acceptances are less than $4，750 million. The liquidators would not give such consent without returning to the Court for further directions.
is a very important safeguard for the creditors. That
There is another important point with which I must conclude. Unlike the hearing here, the application by the liquidators of BCCI SA in London was strenuously opposed. The decision by the Vice-Chancellor is under appeal. If that appeal succeeds, the liquidators of BCCI Overseas will undertake to seek further directions from this Court.
I now turn to the application by the liquidators of BCCI Overseas in case number 286 of 1991. They seek approval of an agreement substantially in the form of the draft ICIC agreement which they have already placed before the Court in their capacity as liquidators of BCCI Overseas and CFC. The agreement is one of the Majority Shareholders' Agreements, and I need not repeat what I have already said with regard to aspects of those agreements viewed as having regard to the terms of the ICIC agreement in that package and within the group.
It is apparent from the Provisional Liquidators' investigation to date that ICIC Overseas was established for the purpose of providing banking services to clients on a confidential basis. It was and continues to be the recipient of funds from BCCI Overseas and, perhaps, other members of the BCCI group, and it acted as a conduit for those and other funds to other members of the ICIC group. All ICIC Overseas accounts and reconciliations were located in Grand Cayman, and the day-to-day booking of other transactions was carried out in Grand Cayman. However, so far that the decision-making in ICIC Overseas was initiated and coordinated by BCCI management and others, and the ultimate affairs of the ICIC group and the BCCI group were intact.
The background to the ICIC agreement is that the Majority Shareholders claim to have tracing or other proprietary and trust claims against ICIC Overseas, and the investments, and other companies in the ICIC group, as the principal BCCI companies arising from the alleged some misappropriation and misapplication of sums deposited in customers and borrowers common to both the BCCI group and ICIC Overseas.
Majority Shareholders with ICIC Overseas, which total $2,000 million, pursuant to the ICIC agreement, is intended that the ICIC group will be ring-fenced, C assets of the companies pooled and the companies liquidated in the agreement are mutual relied in between the Majority Shareholders, the principal BCCI by the companies and ICIC. From that it can be seen that the prospect of a conflict of interest situation arises from the liquidators in their capacities as liquidators of BCCI Overseas and CFC, and of ICIC Overseas.
I am satisfied that the ICIC agreement would be of considerable benefit to the creditors of ICIC Overseas. Indeed, they would, as far as can be foreseen, do comparatively well. Without the agreement, and even that a claim against BCCI for $2 billion is sound with regard to the other way, what matters in the present situation more than the merits is the prospect of seeing the fruits of victory. They could be minimal or negligible, any non-existent without the rescue package of which the ven agreement is a part. However, there is no fully independent opinion before the liquidators or the Court dealing with the matter.
merits of the mutual claims between ICIC and the pri
BCCI companies. The liquidators act on both sides.
The Court undoubtedly has jurisdiction to appro d
agreements no less than in the case of the others wi
I have already dealt, but should I exercise it in the le
circumstances? In the ordinary case, I would be almost
compelled to adjourn the matter for independent advice
obtained, but this is the exceptional case. The ICIC
agreement is an important building block in the struc
the overall scheme of partial rescue offered by the lic
Shareholders. Without it that structure collapses.
Moreover, the whole matter is urgent, even taking into
account the extended deadlines to which the Majority
Shareholders have agreed. Their attitude is clear f
affidavit which they put in in Cause 284 of 1991. Future
delays can jeopardize the whole negotiations and be it
catastrophic.
If the Majority Shareholders' tracing or other he
proprietary claims are left in place and succeed, the
major
not only wipe out any return to the creditors of ICIC
Overseas, but by reason of their nature spill over ag
the creditors of the principal BCCI companies. It w
wrong for me to comment in more detail than is reveal
the liquidators' report on the claims by the Majority
Shareholders, but as the Liquidators themselves recog
even the pursuit of such a claim would prevent any w
distribution being made to creditors until it was res
That would be years ahead. The elimination of the cl
on any view an advantage of such an overwhelming kind
claim is
hard to envisage any independent expert advising a
rt.
This matter of conflict of interest is a serious
difficult one, but taking into account all the matter
which I have referred, I conclude that I should appro
without further delay, an agreement substantially in
of a draft submitted to me, and authorise and empower
ferr
the
Liquidators to execute it and do the acts and things
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