Left: Coffee farmer Eric Anderson points at what was once his farm that went downhill after a landslide in Cascade in the Blue Moutains in Portland last year. Right: Dyoll Building in New Kingston - Ricardo Makyn/Staff Photographer
The liquidators of Dyoll Insurance have announced that they will formally appeal the decision by a Jamaican judge that US$8 million (J$520 million) of reinsurance money on two large policies- including one covering hundreds of Jamaican coffee farmers - should go directly to those claimants rather than in a pool for the benefit of all creditors affected by the company's liquidation.
At issue is the ultimate fate of US$3 million (J$195 million) that reinsurers had paid to settle claims by up to 800 coffee farmers for damage to their crops suffered from Hurricane Ivan in 2004 as well as another US$5 million (J$325 million) for the 18-hole Safehaven golf course and club in Grand Cayman.
File appeals
In June, Justice Bryan Sykes, agreeing with the claimants, ruled that Dyoll had operated merely as an agent or front for the policyholders in placing the policies and that the payouts should go directly to them.
The liquidators argued that the proceeds were assets of Dyoll and should be distributed on the same basis among all unsecured creditors.
"Based on the advice received and taking into consideration the cost of appeal against the benefit to creditors, the JLs (joint liquidators) and the committee of inspections (the elected representatives of creditors) agreed to file appeals," the liquidators, Kenneth M. Krys and
J. W. Lee said in a statement.
Dyoll was put under management, and subsequently placed into liquidation, by Jamaica's Financial Services Commission (FSC) early in 2005 when regulators found that the company's finances were impaired.
The FSC also claimed that some senior managers had attempted to hide the state of the finances in the months after 'Ivan' slammed in Jamaica and The Cayman Islands, causing hundreds of millions of dollars in claims, mainly in the latter British colony.
Not convertible
At a creditors meeting last year, it was disclosed that Dyoll had liabilities of approximately J$2.5 billion against assets of $1.6 billion, but liquidators indicated that not all the assets might be convertible.
The assets, for instance, included J$403.5 million in receivables, some of which would probably be difficult to collect.
There is also a dispute over how much money the FSC held for Dyoll in a so-called prescribed account, which regulators demand insurance companies pay over to cushion potential shortfalls in claims settlements. This fund is to cover only policies concluded in Jamaica.
The FSC says that the fund contains about $375 million, which means that more of the assets would be available to Jamaican creditors, against $45 million claimed by the liquidators. This issue is to go to an arbitrator.
If the fund is at the lower end of the scale, as claimed by the liquidators, it means that there will be more cash in the general pool from which creditors, other than Jamaicans, can share.
Dividend payout
It is apparently a similar concern that is causing the liquidators to appeal Justice Sykes' ruling, which, they said, had "negative financial implications for the future dividend payments to the wider body of creditors of Dyoll".
Last October, the liquidators had promised an initial payout of 17 per cent to creditors and had suggested that those who were owed could eventually collect up to 30 cents on the dollar. However, in April, the liquidators began to make a payment of 12 per cent, partly because of the uncertainty over the prescribed fund.
Advance payments
In the case of the Jamaican coffee farmers, who were insured via the Coffee Industry Board, the Government recently announced that it would advance them approximately $100 million, against the US$3 million that remains in dispute. It was, however, not immediately clear what would happen with regard to the rest of the money should the Dyoll liquidators win their case at appeal and how the government might recoup its money.
