Vantis Suffering Major Cashflow Problems

Vantis is reported to be suffering major cashflow problems because liquidators stand their own costs unless and until funds are available to pay them.

In the case of SIB, there are substantial funds - Vantis say that they have identified more than USD100 million in the UK. But the assets are frozen after the UK's Serious Fraud Office, with support from the US Department of Justice obtained an order to secure the funds. Vantis applied for an order in England that the assets should be controlled from Antigua and Barbuda and that that jurisdiction is the "Centre of Main Interest" and that they, therefore, fall within the scope of Vantis' instructions. But the receiver in the USA appealed.

The Court has not yet ruled, perhaps having in mind the case of European Bank in the Cayman Islands where regulators appointed liquidators who wound up the bank whilst criminal proceedings were proceeding; the criminal proceedings were thrown out but by then the bank was dead. The liquidation paid all creditors in full together with substantial liquidation costs leaving shareholders without a bank and out of pocket.

The only reason that SIB is in the hands of liquidators is because the US authorities accused Allen Stanford of fraud; he has not been tried.

SIB assets in Switzerland are also frozen and the liquidators have also applied for those to be released, again with no favourable response.

The reports as to Vantis' financial state were reported The Times today citing a note in Vantis' accountants' report. The new (Non-Executive) Chairman of Vantis, since mid December, has been Mike Wheeler, formerly Global Managing Partner of Advisory Services at KPMG. There have been a number of board changes. KPMG are the auditors for Vantis.

They have qualified the accounts with a startlingly clear statement: there are "material uncertainties associated with receipts from the Stanford insolvency. [The Stanford uncertainties] may cast significant doubt on the company’s ability to continue as a going concern” Vantis restructured its borrowings last year, rescheduled a bond payment and arranged a modification of its banking covenants to something "more appropriate." But KPMG are not convinced that this will work: “the validity of the going concern basis depends on the group being able to operate within its current banking facilities and covenants which requires the successful outcome of the above”.

In short, while the assets remain frozen and not available to the liquidators to pay themselves, the liquidators face collapse.

In the UK, liquidators are subject to remarkably little supervision with regard to their activities and fees and those estates that do have funds are often subjected to very substantial charges in order to make up for the cases where there is a loss as the insolvency practitioners view their practice as a whole rather than in individual cases. There is fierce competition amongst firms to secure cases where there are assets against which charges may be raised