Caledonian Bank court authorizes temporary protection from creditors

By Kali Hays

New York, Feb. 25 – Caledonian Bank Ltd. received a preliminary injunction on Wednesday preventing creditors from taking action against it, according to an order from the U.S. Bankruptcy Court for the Southern District of New York.

The court determined that without the injunction “there is a material risk that the debtor will suffer irreparable harm to the value of its business, assets, and property as a result of potential enforcement and collection efforts of creditors pending the disposition of the Chapter 15 petition.”

As previously reported, Caledonian filed Chapter 15 bankruptcy on Feb. 16 to gain U.S. recognition of its Cayman Islands controllership proceedings that arose from the Securities and Exchange Commission freezing the bank’s U.S.-based assets in early February.

An SEC complaint alleged that from January 2013 to August 2013 the bank profited from the sale of common stock in four shell companies that did not have a valid registration statement on file or in effect.

The freeze resulted in many of the bank’s customers requesting a withdrawal of their funds, rendering it cash flow insolvent and forcing it to suspend operation of all services.

The preliminary injunction will remain in effect until an order is given on the Chapter 15 petition, according to Wednesday’s order.

A hearing on case recognition is set for March 17.

The bank is a wholly owned subsidiary of Georgetown, Grand Cayman-based specialized financial services provider Caledonian Global Financial Services, Inc. The Chapter 15 case number is 15-10324.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.