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UGI Finance liquidator ready to report to creditors

Published:Friday | March 19, 2010 | 12:00 AM

Sabrina Gordon, Business Reporter

Dalma James, liquidator for UGI Finance and Investments Limited (UGIFIL), says counting the assets of the 13-year-old company is taking longer than expected, but that he would likely meet with creditors within two weeks.

"We are still in the process of gathering the assets of the company," James told the Financial Gleaner, after queries that were sparked by calls from anxious creditors.

UGIFIL, a subsidiary of Neville Blythe's United General Insurance group, was placed in voluntary liquidation in December after the company found itself strapped for cash.

But James said Thursday that his assessment of the books, so far, indicates there are sufficient resources to suggest that the company's assets outweigh its liabilities.

UGIFIL ran into financial difficulty because most of the assets were tied up in long-term investments, he said, mostly real estate.

Initially, James had set a timeline of nine months to liquidate the company, which would have put his original deadline at the close of summer, but now acknowledges that "that date will not hold right now".

UGIFIL was placed into voluntary liquidation last December. The company has funds under management totalling about one per cent or more than $8 billion, of the industry total of $884 billion at March 2009, reported by the Financial Services Commission. Its creditors number around 700, according to James.

Voluntary liquidation can take two forms: either a members-/shareholders-initiated winding up, providing the members have enough assets to satisfy the creditors. On the other hand, if the company is insolvent, creditors can initiate the winding-up procedure.

In the case of UGIFIL, which is over 90 per cent owned by the Blythe group, it was the shareholders - numbering nine or 10 - who opted for the liquidation, James said.

Liquidity crunch

His initial assessment of company assets appears to bear out the inherent claim of UGIFIL's solvency in taking that route to dissolving the operation.

The meeting to be held with creditors will be twofold, according to James, with the directors having to explain to creditors and investors how they got into the liquidity crunch; while he would report on his assessment of the company.

"Among the main issues creditors will want to know is when and how much they are likely to get at the end of the process," said James.

Part of his responsibility, he noted, will be to inform creditors as soon as he is in doubt about the possibility of recovering the assets and making any payouts. The majority of UGIFIL's assets are tied up in real estate which, he said, is not easily offloaded, plus other intergroup transactions which are complicated and will take time to unravel.

"The assets are tied up in real estate, loans to intergroup subsidiaries, shares in other companies and government securities," the liquidator said.

"The bigger junk is the off-loading of real estate. There is about 25 per cent which is in receivables with collateral, which puts us back into real estate, but we have more leeway and can be more aggressive in this case."

James declined to say the estimated value of assets and liabilities he has found to date.

He previously said, however, that the historic book value of assets was $900 million.