HIGH COURT Justice Kevin Ramcharan, in September 2019, aborted an attempt by CL Financial subsidiary, Home Construction Ltd (HCL), to sell two highly coveted pieces of prime commercial real estate, following an objection to the lack of transparency and the failure to properly advertise the properties in the initial sales process by one of CL Financial’s joint liquidators, David Holukoff of the accounting firm, Grant Thornton.
On September 18, 2019, Justice Ramcharan issued an order denying permission to CL Financial and its subsidiaries HCL, Highgate Development Ltd, Beta Realty Investments Ltd and Trincity Commercial Centre Ltd to sell two parcels of prime commercial real estate—one next to the South Park Mall and Business Park in San Fernando and the other adjacent to the Trincity Shopping Mall. The properties have been valued at over $90 million.
Ramcharan’s order was in response to a notice of application and an affidavit filed by Holukoff on June 10.
In accordance with the provisions of the Companies Act, all commercial transactions by CL Financial and its subsidiaries must be sanctioned by the High Court because in July 2017, Corporation Sole (the Minister of Finance) applied to the courts for the winding up of the group and the appointment of liquidators to manage the disposal of its assets and the repayment of its creditors.
The southern property is 15.5 acres and is located on the Michael Rahael Boulevard, which is an offshoot of one of the main arteries linking the Solomon Hochoy Highway to the city of San Fernando. It is surrounded by the Cocoyea residential neighbourhood, the University of Trinidad and Tobago and the South Park Mall. The property was valued in 2016 at $60 million.
Express Business understands that Trincity Commercial Centre Ltd, a subsidiary of HCL, drafted a sales agreement to dispose of the San Fernando property to a company owned by a San Fernando accountant and his family. The draft sales agreement indicates that the company submitted a bid of $60,000,522 for the 15.5 acre plot of land, which was $522 more than the official property valuation. The accountant made a 10 per cent downpayment of $6,000,052.20 to Trincity Commercial Centre.
Following Justice Ramcharan’s court order, the sales agreement had to be scrapped and the accountant reimbursed his downpayment.
In his September 18 order, the judge also directed CL Financial and its subsidiaries “to take such steps as are necessary for the advertisements of the two parcels of land mentioned at paragraph 18 of the affidavit of David Holukoff filed June 10, 2019.”
The joint liquidators have ensured that the second sales process is widely publicised with newspaper advertisments appearing in the three daily newspaper, the Wall Street Journal and the Financial Times, internationally, and regionally, the Barbados Nation, the Jamaica Observer, Guyana’s Stabroek newspaper and The Vincentian.
The deadline for the submission of offers for the properties is no later than December 12 at 3pm Atlantic Standard Time.
In the fourth report of the joint liquidators, dated June 14, 2019, Holukoff wrote: “ In summary, the joint liquidators have sought to implement new boards and impro=ve the general corporate governance across the group with the introduction of audit, operational and human resources committees. These committee work together with management to ensure proper information is provided to the board so as to ensure informed and efficient decision making.
“The closer scrutiny and input afforded this structure ensure that the operations and governance of the group entities are safeguarded as their businesses and assets are prepared for sale.”
In its June 30, 2019 report to the High Court on its management of the CLICO and British American Trinidad assets, the Central Bank said: Further to the Bank’s consultations with, and directions from the Minister of Finance pursuant to section 44F(5) of the Central Bank Act, sale and purchase agreements for the transfer of CLICO’s 29.9 per cent shareholding in Angostura Holdings Ltd (AHL) and 30.1 per cent direct shareholding in Home Construction Ltd (HCL) were executed on August 23, 2017 respectively, thereby appropriately reducing CLICO’s indebtedness to the Government.
“The transfer of the AHL and HCL shares were effected on September 29, 2017 and October 24, 2017 respectively.”
CL Financial collapsed in January 2009 after the Government was forced to intervene to protect the financial system from being infected by the liquidity and solvency problems experienced by insurer CLICO and CLICO Investment Bank.
Over the years, a number of CLF assets were sold, including Primera Energy Group Ltd, Lawrenceburg Distillers Ltd, Laselles deMercado Ltd, Burn Stewart Distillers Ltd, Thomas Hine and Company Ltd, Societe Dugas Ltd SA, Valpark Shopping Plaza Ltd and Atlantic Plaza.
CL Financial owns 51 per cent of CLICO, while the Government owns 49 per cent of the company. The Government also owns 14 per cent of CL Financial.
