Cayman Islands’ Caledonian Bank files Bankruptcy after SEC freeze

From Bloomberg

(Bloomberg) — Cayman Islands-based Caledonian Bank Ltd. filed for bankruptcy in New York, saying a federal court’s freeze on its U.S. assets triggered a run on the bank by customers.

The U.S. Securities and Exchange Commission sued the bank Feb. 6 over claims it profited from stock sales of invalidly registered shell companies. The SEC won a court order the same day temporarily freezing the bank’s accounts at Northern Trust International Banking Corp. and Morgan Stanley Smith Barney LLC.

A subsequent waiver of the freeze didn’t calm customers who made “a substantially larger number of withdrawal requests than expected,” Caledonian said in court papers filed on Monday in bankruptcy court in Manhattan.

The asset freeze “had a crippling effect on debtor’s liquidity,” lawyers for the bank said in the filing.

The two U.S. accounts held about $300 million, out of total bank assets of $585 million, according to the filing. The bank’s $560 million in liabilities include $520 million payable to customers on demand, lawyers said in the filing.

Caledonian Bank filed for court protection under Chapter 15 of the Bankruptcy Code, which shields U.S. assets of insolvent companies overseas. The bank has about 1,550 customers and almost 1,900 active accounts. About 51 percent of its assets are in the U.S., according to the filing.

The case is In Re: Caledonian Bank Ltd., 15-10324, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

For more on this story go to: http://www.bloomberg.com/news/articles/2015-02-16/cayman-islands-caledonian-bank-files-for-bankruptcy-in-u-s-

Bahamas group to buy Caledonian Trust and Caledonian Directors Limited

02/16/2015 by News Team From Offshore Bankers

Sterling Financial Group Inc, a financial services group based in The Bahamas, announced today that it has agreed to terms to purchase Caledonian Trust (Cayman) Limited and Caledonian Directors Limited, both regulated companies in the Cayman Islands. The transaction is pending regulatory approval in the Cayman Islands.

The acquired companies, to be re-named Sterling Trust (Cayman) Limited and Sterling Directors Limited, will maintain their current offices and staff. Once the approval of the Cayman Islands Monetary Authority is obtained, the new parent company expects to invest heavily in additional technology and infrastructure.

Sterling Financial Group is an integrated private equity, real estate investment, development and services company based in Nassau, The Bahamas.

The company is also the fund manager for New Providence Income Fund. The company has active investments and projects throughout the Caribbean and North America and is always seeking new investment opportunities.

Sterling Financial Group and its related companies are regulated companies in both The Bahamas and the Cayman Islands.

For more on this story go to: http://www.offshore-bankers.net/article/19849/bahamas-group-to-buy-caledonian-trust-and-caledonian-directors-limited

Related stories published by iNews Cayman

CIMA Appoints EY’s Hutchison and Loebell as Controllers of Caledonian Bank Limited
February 11, 2015 by ieyenews
CIMA Appoints EY’s Hutchison and Loebell as Controllers of Caledonian Bank Limited
This serves as statement on behalf of the Controllers, that The Cayman Islands Monetary Authority (“CIMA”) appointed Keiran Hutchison and Claire Loebell of Ernst & Young, Ltd. as Controllers of Caledonian Bank Limited (“CBL”) and Caledonian Securities Limited (“CSL”) on 10 February 2015. The appointment of the Controllers by CIMA vested immediate control of the affairs of CBL and CSL to the Controllers. The Controllers will report their initial findings concerning the affairs of CBL and CSL to both CIMA and the Grand Court of the Cayman Islands, and CIMA will then be in a position to determine what further action to take.
In the meantime, the operation of all services to the customers and clients of CBL remains suspended.
The Controllers are not appointed over any other entity within the Caledonian group of companies.
An update will be provided to stakeholders as soon as possible.
Enquiries can be directed by written correspondence to Barry McManus at [email protected].

Release Wed 11 1015
Caledonian Securities Limited and Caledonian Bank Limited – In Controllership
The public is advised that effective 10th February 2015 the Cayman Islands Monetary Authority (“the Authority”) appointed Mr. Keiran Hutchison and Ms. Claire Loebell (“the Controllers”) of the firm of Ernst & Young Ltd., to assume control of the affairs of Caledonian Securities Limited (“CSL”) pursuant to section 17(2)(viii) of the Securities Investment Business Law (2011 Revision). On that same date, the Authority appointed Mr. Hutchison and Ms. Loebell to assume control of the affairs of Caledonian Bank Limited (“CBL” and, together with CSL, the “Licensees”) pursuant to section 18(1)(v) of the Banks and Trust Companies Law (2013 Revision).
Effective with this appointment the Controllers assumed immediate control of the affairs of CBL and have all the powers necessary, to the exclusion of any operator, to administer the affairs of CBL in the best interests of its depositors, investors, and creditors. The Controllers also assumed immediate control of the affairs of CSL and has all the powers necessary, to the exclusion of any operator, to administer the affairs of CSL in the best interests of its clients, investors, and creditors. The Controllers are also responsible for assessing the financial position of the Licensees and submitting a report to the Authority by a date to be specified.
Written enquiries to the Controllers should be forwarded to Barry MacManus by email at [email protected] or telephone (345) 814-8997.

Caledonian Bank comments on recent action by SEC/Statement by Cayman Minister
February 9, 2015 by ieyenews
c Further to iNews Cayman’s story yesterday (6) from Courthouse News Service that the SEC on Friday sued Cayman Islands-based Caledonian Bank and four other companies, accusing them of taking more than $75 million from unregistered sales of “virtually worthless” penny stocks, Caledonian Bank have issued the following statement:
“GEORGETOWN, GRAND CAYMAN, Cayman Island, Feb. 9, 2015 /PRNewswire/ — Caledonian Bank announced today that the Company is cooperating with the U.S. Securities and Exchange Commission and is working to prove that its actions were appropriate with respect to the sales of certain restricted securities in the United States.
“Caledonian has always held itself to a high standard within the international business community and we are confident that this will be evident as this matter unfolds.
“We thank our many clients for their words of encouragement and support.”
SOURCE Caledonian Bank
See iNews Cayman story published February 8 2015 “SEC goes after a Cayman Islands Bank” at: http://www.ieyenews.com/wordpress/sec-goes-after-a-cayman-islands-bank/

Minister Weighs In On Caledonian Case
Statement by the Minister of Financial Services, Wayne Panton about the Caledonian Entities
“I have been made aware of a filing action by the United States Securities and Exchange Commission (SEC) in relation to Caledonian Bank Ltd. and Caledonian Securities Ltd. — two entities headquartered in the Cayman Islands (the Caledonian Entities) and regulated by the Cayman Islands Monetary Authority (CIMA).
This is a regulatory matter, which is being dealt with by CIMA.
I am advised that the Caledonian Entities have been in discussion with the SEC and CIMA over the weekend.
I have every confidence that CIMA will seek the best possible resolution and take the necessary action available to it, in the best interests of depositors and investors.”