Trustee: Central Bank liable for damages CKC-accountholdersPOSTED: 02/17/15 12:16 AM
St. Maarten – The trustee in the bankruptcy of the Christian Kingdom Council, attorney Jeroen Veen, holds the Central Bank of Curacao and St. Maarten liable for the damages the CKC-accountholders suffered after the Court in First Instance declared the credit union bankrupt on December 22, 2010, at the Central Bank’s request.
In an administrative court procedure, the trustee asked the court to declare that the Central Bank committed a wrongful act towards all CKC-accountholders and to order the bank to pay damages plus interest to these accountholders. Due to the bankruptcy in 2010, the accountholders who had entrusted CKC with their savings lost all their money.
The Central Bank asked the court to declare the trustee inadmissible because his claim only covers the damages suffered by accountholders, while CKC also had other creditors. The bank furthermore argued that it is not responsible for the damages, because these are due to actions by the CKC, not due to actions by the Central Bank.
The Court in First Instance ruled last week that the trustee will get the opportunity to react to the Central Bank’s arguments and that it will not take any decision for the moment. The case will be on the docket again on March 10, after which the Central Bank will have four weeks to react to the trustee’s position.
The Central Bank gave the Christian Kingdom Council a license to operate as a credit institution on June 19, 2002 but it did not take long for the alarm bells to go off. Already on September 20, 2003 the bank sent several warning letters to CKC. The young credit institution did not abide by its reporting obligations, it had insufficient solvency and liquidity and it did not have a supervisory board.
When the CKC was established, F.M. Brison was appointed as its managing director. The other directors were A.A. de Weever, F.R. Arrindel, J.G. Bloem, C.M. Moore, G.A. Gumbs and R.S. Romney.
In 2003, the Central Bank also announced stricter supervision over CKC. However, three years went by, before the bank sent another warning letter on July 5, 2006. This letter noted that a quick scan had revealed “serious shortcomings” that “endanger the solvency position and the earnings of the institution and therefore need immediate action.”
The letter informed management and the managing board and the supervisory board of CKC that they may “only exercise their powers after approval of a person designated by the bank and with due observance of the instructions of said person.”
Furthermore, the bank demanded that CKC present within 30 days a plan detailing how it would address the areas of criticism and that it submit a monthly progress report. In August 2006, the bank informed the CKC about the identity of the silent trustee – but nothing changed.
The next month, the Central Bank sent again several letters to the credit union stating that CKC was not abiding by the mandatory reporting and the instructions and that a supervisory board was still lacking. “There are serious concerns about the continued existence of the CKC,” the bank warned. It prolonged stricter supervision several times.
Four years later, the Central Bank appointed a second supervisor who reported in August of that year that the situation was so bad that bankruptcy was the only remaining option.
On October 28, 2010 after more than seven years of inept supervision – the Central Bank informed CKC in writing that its operation was no longer viable. In the same letter, the bank revoked CKC’s license and from that moment on it was no longer authorized to operate as a credit union. On December 22, 201 the curtain fell with the decision from the Court in First Instance to declare the credit union bankrupt.