International Bank Account Recovery

Companies that are liquidated and dissolved are permanently struck of the corporate registry. Prior to the definitive closure of the company, assets are collected and liabilities discharged. The result is that inaccurate distribution of assets cannot be restored after the winding down of the company is completed. As such, rules of attribution of assets and the corporate liquidation must be comprehensively studied to avoid that mistakes are made and assets are wrongfully allocated. In matters relating to the offshore financial industry, corporate liquidation and asset recovery ambiguity of the rules may result in personal difficulties.

Until recently, the activities of offshore companies, their stakeholders and (financial) service providers were maintained and terminated with relative ease. The flexible fiscal and accounting rules for offshore International Business Corporations often allow the remaining assets of the company to be distributed as a final payment of shareholder dividend. Matters get more complicated when activities of the company end while assets are still blocked or pending approval for judicial review and repayment. This mostly relates to complicated disputes, international and offshore bank failure, and cases of liability. Such affairs can be lengthy in time and difficult to unravel, with consequential circumstances for the applicable offshore companies and their beneficiaries.

In recovery procedures where the defaulting party is placed under special or statutory administration, and an asset liability mismatch triggered this (temporary) situation, repayment is not always easy. When the administration results in corporate liquidation, the traditional creditor and insolvency hierarchy decides on the order of creditor repayment. Creditors with direct claims are always easier to approve for repayment than others. Offshore bank failure and the closure of financial institutions that deal with non-resident customers follow a similar pattern.

Several financial institutions around the world were placed under resolution after they experienced financial difficulties or were allegedly involved in impermissible behavior. Loyal Bank Ltd in St. Vincent and the Grenadines, FBME Bank in Cyprus and Tanzania, ABLV Bank in Latvia, Satabank Plc in Malta and Lucayas Bank Ltd (previously known as Private Investment Bank Limited) all experienced similar regulatory intervention and wish to mitigate damages for all stakeholders involved.

International bank account recovery is a lengthy and opaque procedure for creditors that is packed with administrative requirements and uncertainties. Creditors often have to file a proof of debt and a proof of claim completed with supporting evidence. These documents substantiate the claim and allow the liquidator or treasurer to verify a claim and reject or approve a claim in the best interest of the financial institution and its creditors. Consequently, corporate account holders and creditors must provide recent ownership details and other relevant documents to the liquidator. This documentation is only available to active companies and do not provide any solutions for liquidated and dissolved creditors. As such, beneficiaries of offshore companies who wish to liquidate their offshore IBC can best do this after total repayment of their outstanding claims is effectuated.