fp Turks and Caicos

What will liquidation mean?

Probably years of waiting and only getting a percentage of your money back.

That was is the message provisional liquidators gave TCI Bank customers at a recent town hall meeting. While Anthony Kikivarakis says he is hopeful they can still find someone to take over the bank and save depositors’ funds, liquidation is a real possibility.

With the reality of TCI Bank moving into formal liquidation looming over the heads of its customers and shareholders, many are asking what that reality will mean for them.

Liquidation is the last resort for the bank after all offers have been evaluated and considered not acceptable for the bank, said Kikivarakis. If Supreme Court Justice Richard Williams decides liquidation is the best option, Kikivarakis and his partner Mark Munnings would begin the long process of selling off assets to offer repayments to customers.

The first to receive their funds would be the laid off workers who are still owed their severance pay, as well as any National Insurance Board or National Health Insurance Plan contributions associated with those payments.

Next in line would be the NIB, which loaned the bank $5.5 million shortly before Christmas. The loan is a secured loan, meaning NIB has a charge against the bank for the total amount. Fees to the liquidators are the next item on the list, along with any expenses they incurred, including legal fees to their local attorney, Clayton Greene.

Bank depositors would then all be treated the same and begin to receive equal percentage shares of any money that is collected or recovered by the sale of assets by liquidators. Full liquidations can take anywhere from two to 10 years, Kikivarakis said.

The Financial Services Commission said it closed the five-year-old bank because of mounting unpaid loans and an abrupt $4 million withdrawal of funds by three large, unidentified customers.

Kikivarakis said in the case of a liquidation, all depositors would have to file an official claim, which would represent the amount owed to them. Over time as enough funds could be collected, he said a request would be made to the judge to make payouts to the creditors. This could happen on several occasions over years.

Most of the bank’s assets are tied up in real estate loans. In the current market, selling those assets isn’t going to be easy, Kikivarakis said, and it would be best if they could wait for prices to improve in order to get the depositors the most money back. However, that may take several years.

In the meantime, all assets of the bank have been frozen, including all customers deposits. All cash has been moved out of the local branch to other banks on island, and all incoming payments are being deposited into those accounts.

People have asked why they are required to continue paying loans from the bank while they were denied access to their deposits. Kikivarakis said the loans represent money the bank paid out on behalf of creditors and those payments would be the source of any money customers get back on their deposits.

When a shareholder asked when he might see his money again, Kikivarakis suggested it was highly unlikely. Shareholders come last in the case of liquidation, he said. This means shareholders would receive funds only if 100 percent of all depositors funds were returned. Given the state of the banks assets and amount of non-performing loans on the books — around 40 percent — depositors can expect to see only a small share of their funds returned, leaving nothing for current shareholders.

In the case of a bank takeover, he said the new buyer would be very unlikely to honor any previous shareholders equity, since they would have to recapitalize the bank by putting in a significant amount of new funds in order to bring it back to life. Buying shares in the bank was an investment and with all investments come risks, Kikivarakis explained. “Those shares may very well be worthless.”

Right now, besides entertaining offers to buy the bank, the provisional liquidator team has focused their efforts on securing all assets of the bank. This includes furniture which was moved from the Grand Turk branch to the Providenciales branch. “We have decided not to sell any assets at this point,” he explained.

Some mortgage holders wanted to try to get other banks to take over their loans, but Kikivarakis said everything is frozen until a decision is made whether the bank will go into full liquidation or is reopened.

Customers and shareholders affected by the closure can contact the liquidators at This e-mail address is being protected from spambots. You need JavaScript enabled to view it or visit the Web site www.tcibpliquidation.com.

For additional information on the creditors committee, call Bill McCallum at 231-0325 or Solie Williams at 231-0052.

Liquidation payout list:

• Employees salaries and severance pay
• Liquidators fees and expenses
• Secured loans, such as NIB $5.5 million
• Depositors : All considered equal
• Shareholders: Only paid when 100% of depositors' money is returned