BCCI Liquidation Hearing Continued Until January
LONDON (AP) _ The main receiver for the Bank of Credit and Commerce International said Monday he hoped a final agreement to reimburse creditors could be reached within three weeks.
Brian Smouha, BCCI’s main receiver and a partner at Touche Ross and Co., made the statement after a British judge postponed until Jan. 14 a decision on whether to liquidate BCCI.
″As soon as (payout) proposals are completed, they will be submitted for consideration. Obviously, the final decision will be taken by the courts and the creditors,″ said Smouha.
Smouha was appointed receiver by banking authorities in Luxembourg, where the bank is registered.
Touche Ross said an initial payment of 10 cents in the dollar could be made to creditors and depositors as early as 1992. The payment assumes BCCI’s majority shareholders, the ruling family and government of Abu Dhabi, agree to make cash payments and assume some liabilities.
Adjournment of the hearing had been widely anticipated. The delay was intended to let talks continue between the receivers and Abu Dhabi representatives for a partial reimbursement for creditors and depositors.
The Abu Dhabi majority shareholders, including Sheik Zayed al-Nahyan, welcomed the court’s decision.
They issued a statement that said the postponement endorsed their efforts ″to make a positive contribution toward relieving the suffering of depositors and creditors.″
Court documents filed by the receivers, Touche Ross and Co., said BCCI S.A. and BCC (Overseas) Ltd. of the Cayman Islands had a combined shortfall of $9.482 billion. This broke down into estimated liabilities of $10.641 billion and realizable assets valued at $1.159 billion, according to the documents.
The international bank was seized by regulators on July 5 following an auditor’s report that alleged long-term widespread fraud. Auditors have estimated losses in the billions of dollars, but say the full amount may never be known because of the complexity of the fraud.
A total of 1.1 million depositors with $19.5 billion on deposit at the banking group were affected by the July 5 seizure. Following the seizure, the Bank of England filed a petition with the High Court in London to liquidate BCCI SA.
The court documents said that creditors could be reimbursed between 30 percent and 40 percent of their claims, depending on talks now underway between the receivers and Abu Dhabi.
The proposed liquidation plan was announced Nov. 22. It calls for a pooling of the assets of BCCI SA and BCC (Overseas) for distribution to creditors worldwide.
Touche Ross said the two companies, with 63 offices in 27 countries, represent more than half of the banking group. It declined to elaborate further on the plan, citing the ongoing negotiations with the Abu Dhabi shareholders.
However, if the discussions aren’t successful, Touche Ross said, ″There is little prospect of a worthwhile dividend (pay-out to creditors) being paid this century, or indeed at all.″