Grenadian Finance Minister Appeals Capital Bank Court Ruling

by Amanda Banks, for LawAndTax-News.com

13 May 2008

The Grenadian High Court last week ruled in favor of an application by Capital Bank, it has emerged, revoking the appointment of David A Holukoff as the Receiver of Capital Bank International Limited.

The basis of the Court’s ruling is its interpretation of the letter written by the Governor of the Eastern Caribbean Central Bank (ECCB) to the Minister of Finance, requesting the Minister to take action to protect the depositors of Capital Bank International.

The Minister construed the letter as a recommendation to appointment a Receiver. The Court took a different view.

The Grenadian Finance Ministry has appealed the ruling, and in the process has also sought a stay of the Court’s ruling. If that stay is granted, then the Receiver will remain in control of the Bank.

The Minister’s decision was made in February after it was determined that the bank was unable to honor withdrawal requests of its depositors, which raised concerned about its solvency.

A subsequent attempt by the bank to have the appointment set aside was dismissed by the High Court in early March.

In early April, the Minister filed a petition in Court for the reorganization of Capital Bank, and expressions of interest have reportedly been received from several potential investors.

Due to Court-imposed restrictions, the investors were not provided with an opportunity to conduct an on-site review of the bank, thus no firm offers or letters of intent were received. With this recent ruling, it appears that any reorganization efforts will have to be put on hold.

In a statement, the Grenadian authorities concluded by announcing that:

"The Government remains seriously concerned about the interests of Capital Bank’s depositors and other creditors and intends to exercise its full range of legal rights to reverse the subject ruling."

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