Press Release – Julian A. Murillo, Liquidator, Atlantic International Bank Limited – September, 24, 2019 – The United States Federal Trade Commission (“FTC”) has announced the approval of a Settlement with Atlantic International Bank Limited (“AIBL”), now in liquidation, that pertains to a lawsuit filed in the U.S. District Court for the District of Maryland on October 31, 2018, against several companies and individuals involved with the Sanctuary Belize development.
Atlantic International Bank Ltd. was named in this suit for allegedly “aiding and facilitating” the other defendants’ violations of the Telemarking Sales Rule and the FTC Act. The FTC had obtained, ex parte, a Temporary Restraining Order on November 5, 2018, that, among other things, purported to freeze all of AIBL’s assets (or at least those assets in the United States) up to US$144 million, the purported extent of losses suffered by the alleged victims affected by the violations the defendants were accused of.
The Settlement agreed upon will see the ceding to the FTC of US$23 million of AIBL assets held in the US and currently subject to the restraining order, along with various agreements of cooperation with the FTC. The Settlement resolves all allegations against AIBL, ensures the recognition of the liquidation process under US Chapter 15 bankruptcy laws thereby enabling access to the remaining assets in the US, and paves the way for the optimal and most expeditious possible return for depositors and creditors in the liquidation process.
Although there has not been any court judgement or determination against AIBL in the substantive Sanctuary Belize suit, and the bank has strongly denied any wrongdoing, a reasonable settlement of the FTC allegations was in the best interest of AIBL’s depositors and creditors and the liquidation process, for several compelling reasons.
First, the ability to effectively dispose of the bank’s loan portfolio without hindrance, a portfolio which represents a significant portion of AIBL’s assets and is located in Belize, is a material factor for prospective purchasers of those assets. The FTC proceedings against AIBL had impaired loan repayment flows which, without an urgent settlement, would have severely deteriorated the quality of the loan portfolio and negatively impacted its value.
Second, the financial, human resource and time costs attendant to an extended legal battle with the FTC in US courts would be an unendurable burden on the liquidation estate. At the point of revocation of its license on April 12, 2019, AIBL’s management had already spent over US$2 million in legal costs. Since the liquidation process began, these costs continued to rise and have reduced reserves that would otherwise be available to distribute to depositors and creditors.
Third, the liquidation could not be concluded until the FTC proceedings are concluded and AIBL’s liability is determined by the US courts. Despite the considerable outlay of time and costs already expended in just the preliminary rounds of court action in the US, the substantive FTC Sanctuary Belize case is not scheduled to begin until late January, 2020 in Maryland. The uncertainty of the duration, and most importantly, the outcome of the substantive case were therefore plausible risk factors that had to be considered.
AIBL’s assets located in Belize include fixed assets, limited investments, and the loan portfolio which represents close to 70% of the total assets. The majority of the fixed assets have already been disposed of via public auction, and targeted values have been successfully realized. A transparent sales process for the loan portfolio has also commenced. The loan portfolio sale process is at an early stage and there are multiple factors which will likely impact the disposal value of the portfolio. Nevertheless, my team and I will continue our best endeavors to ensure that maximum values are realized on all assets to safeguard the best outcome for depositors and creditors.
JULIAN MURILLO
Liquidator – Atlantic International Bank Ltd.
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