The Dyoll building in New Kingston.

John Lee and Kenneth Krys, joint liquidators of the now defunct Dyoll Insurance, got paid $105 million to September 30 for a year's work done on winding up the company, fees that represented just about a third of total payouts to creditors.

Krys of RSM Cayman and Lee of PricewaterhouseCoopers, Kingston, in their first interim update to creditors dated December 12, reported payouts of $325 million so far from Dyoll's limited cash pool, the largest chunk of which was to themselves - $57.1 million for Krys and $47.6 million for Lee.

Another $130 million was shared among creditors, while the remaining $90 million covered legal and other fees.

Remuneration

The liquidators, who got 81 cents for every dollar paid to creditors, said, however, that their remuneration was below forecast.

"The monthly fee invoices are submitted to the Creditors' Committee of Inspection (COI) for approval before payment is made," said Krys and Lee in a note to creditors. "... total fees paid are below budget."

The fees were approved by the committee in November last year.

The COI was appointed by the Supreme Court of Jamaica on August 18, 2005 and include: Neville Henry as chairman, Gregory Bell, Oswald O'Meally, and Peter South and Dwight Panton, both from the Cayman Islands.

The $130 million paid so far to creditors represent 12 per cent of the total liabilities to policyholders who for more than two years have waited on some compensation to help recover from the devastation caused by Hurricane Ivan in September 2004.

The Caymanians felt the brunt of the havoc left in the wake of the category five winds and storm surges, described as a 1,000 year event, which damaged 90 per cent of the island's cars and more than half of the properties.

Early disbursements

As a result, the early disbursements by Krys and Lee were largely among Caymanians, who, on average, received $2.50 for every dollar paid out to Jamaicans.

The $90 million spent on legal fees, loss adjusters and reinsurance specialists, among other things, included $4 million paid to Ken Tomlinson of Business Recovery Services Limited for five months of work temporarily managing the defunct company up to August 18, 2005 when the joint liquidators took over.

The Financial Services Commission (FSC) placed Dyoll Insurance in 'temporary management' on March 7, 2005 when it was revealed that the Jamaican company could not meet its liabilities linked to hurricane damage claims.

As at September 30, just under $1 billion was accounted for on Dyoll Insurance's books and amounts held in trust by regulatory authorities, both in Jamaican and Cayman, to pay claims.

The liquidators do not expect to recover some $30 million of accounts receivable.

The joint liquidators during the course of the liquidation received over 1,600 claims, of the 8,400 claims that could potentially be filed, of which 1,256 claims totalling $1.39 billion passed the liquidators' litmus test.

Of the admitted claims, 979 were from Jamaican policyholders valued at $560 million, and 277 were Caymanian, valued at $839 million.

The first interim distribution of 12 per cent was made on May 16, 2006 reducing the admitted liabilities to $1.26 billion.

A substantial portion of the liabilities on the books, however, is conditional on a series of court cases and agreements being finalised, chiefly the Jamaican court's decision on June 29 to pay two large reinsurance policies totalling J$427 million Ñ including one covering hundreds of Jamaican coffee farmers Ñ directly to the policyholders, rather than to the estate of the company for the benefit of all creditors. The liquidators are appealing the court's decision.

The Cayman Islands Monetary Authority (CIMA) currently holds J$124.5 million which it plans to pay strictly to Cayman policyholders, unless the FSC agrees to distribute the J$330 million it holds for payment to Jamaican policyholders, equitably among all creditors, including Caymanians.

The FSC plan is also being contested in court.

The liquidators believe that should both cases yield favourable results, "it is projected that further dividends in the region of 25 per cent to 30 per cent may be possible."

camilo.thame@gleanerjm.com