Court Oversight for Montaque Arm Liquidation

By Neil Hartnell (Business BVI)–The liquidation of Owen Bethel’s Montaque Capital Partners is set to become court-supervised, Tribune Business has confirmed, the winding-up having resulted from the company becoming insolvent.

Documents obtained by this newspaper disclosed that Montaque Capital Partners’ voluntary liquidation, initiated by a shareholder/Board resolution on September 30, 2011, was approved by its regulator, the Securities Commission of the Bahamas, but only on the grounds that it received “a written undertaking to have the joint liquidators proceed to have the liquidation become court-supervised immediately”.

This was contained in an October 11, 2011, letter sent by joint liquidators, Ed Rahming and Kenneth Krys, of KrYs Global, to Montaque Capital Partners’ clients and creditors. The letter also revealed the company had committed to make the liquidation court-supervised within 14 days of the Securities Commission’s approval.

“The joint liquidators confirm that they have commenced the steps necessary to file a petition with the court for the supervision of the liquidation, which will include an application for directions from the court on the conduct of the liquidation,” Messrs Rahming and Krys wrote.

When contacted by Tribune Business late last week, Mr Rahming said he and his fellow liquidator had “moved the petition” for Montaque Capital Partners’ dissolution to be placed under Supreme Court supervision. They still, though, needed to obtain a date for the court to hear the petition, plus conclude other formalities.

While unable to disclose the scale of assets involved, or potential size of any loss likely to be suffered by Montaque Capital Partners’ creditors and clients, Mr Rahming said the liquidators’ investigation would also involve an examination of affiliates/related parties within the overall Montaque Group.

And he also confirmed to Tribune Business that the liquidators were in control of the Montaque Group’s offices, on the fourth floor of Centreville House. Montaque Capital Partners’ books and records had been transferred elsewhere, and Mr Bethel no longer operated from the premises.

Tribune Business attempted to contact Mr Bethel for comment, but his office phone rang out. He did not return a message left on his cell phone.

“We have moved the application for it to become court-supervised,” Mr Rahming told Tribune Business. “It will still be a voluntary liquidation, but the liquidation will be supervised by the Supreme Court. It will be in line with what the regulator wanted, and be good for the jurisdiction. We also wanted it as liquidators.”

Explaining that he could provide few details and figures, given that the liquidation was only three weeks’ old, Mr Rahming added: “It’s just the beginning. There isn’t much we can say. We’re beginning our work in earnest, and hope to move along very quickly and make a report to the creditors soon.”

The first meeting of Montaque Capital Partners’ creditors is scheduled for November 8, 2011, at the British Colonial Hilton. Mr Rahming said both the meeting, and first report, would outline both the steps the liquidators have taken – and intend to take – in the short-term.

“We want them to be as involved and have as much influence in the process as possible,” Mr Rahming added. “After all, it’s their assets. We have quite a bit of work ahead of us, and want to do it right and thoroughly.

“We’d like for things to go as quickly as possible when creditors and clients are involved. We’re going to review the books, conduct an investigation and communicate with clients to tell them what’s happening.”

Mr Rahming emphasised that liquidations were often never easy, with all sorts of unforeseen situations and problems – all needing resolution – likely to occur.

“We’re still reviewing the books and records, and performing investigations. We are looking at related parties and other companies in the Montaque Group, but at this time we’re not able to say whether they’ll be impacted, when they’ll be impacted, and if they will be significantly impacted by the liquidation of Montaque Capital Partners,” he told Tribune Business.

“We’re in complete control of the offices. Owen no longer operates from the offices as of the date we were appointed as liquidators. We have moved most of the premises to storage, and some of it to here. We have secured the books and records, and moved them to another location.”

In their October 11, 2011, letter to creditors, Messrs Rahming and Krys said they had “secured and frozen” all Montaque Capital Partners’ assets, including those placed with custodian banks and broker/dealers on behalf of clients.

“In addition, the joint liquidators are in the process of investigating the company’s financial affairs, including a thorough review of client accounts and assets placed with the company for management,” they wrote. They added that the investigation was “complex”.

The September 30, 2011, resolution of Montaque Capital Partners’ shareholders detailed how it came about following an Extraordinary General Meeting (EGM) held at 4pm that day.

Present were Mr Bethel, in has capacity as director of both the Montaque Group and Montaque Securities International, which collectively held 4,750 shares in Montaque Capital Partners. The only other person present was Edison Sumner, who held 250 shares in Montaque Capital Partners.

With Mr Bethel acting as chairman, and Mr Sumner as secretary, the EGM notes disclosed: “The chairman stated that the meeting had been convened to discuss the present financial standing of the company in light of the recent demands and requests by clients of the company for various payouts, and to further discuss the status of all outstanding loans and other third party debts that are owed by the company, and the period for payment.”

Montaque Capital Partners’ unaudited and draft financial statements for the periods to end-April 2008 and 2009 were reviewed, along with management accounts for 2010 and 2011.

“The meeting carefully considered the company’s finances and its viability in light of existing contractual arrangements at brokerage houses and its assets, and also ascertained the company’s liabilities to continue its business, and it was decided that it is advisable to wind-up the company due to the fact that the company is insolvent and thereby cannot continue to carry on its business,” the resolution added.

In a previous interview with Tribune Business, Mr Bethel described the Montaque Capital Partners liquidation as “a bitter pill to swallow”.

Mr Bethel is well-known in the Bahamian financial services industry, having served as executive director of both the Bahamas Financial Services Secretariat and the Bahamas Investment Authority prior to starting the Montaque Group’s predecessor in 1993.

He heads one of the few Bahamian-owned institutions still operating in the international financial services sector.