Current Developments in the BCCI Affair

Abstract

Since the collapse of the Bank of Credit and Commerce International (BCCI) there has been a plethora of BCCI related litigation. This article considers the latest developments in the BCCI saga while focusing on the current state of litigation in both the UK and the USA. It appears that creditors of BCCI will finally be receiving some of their money which was lost as a result of the closure of BCCI on 5th July, 1991. A compensation package requiring the approval of courts in England, the Cayman Islands and Luxembourg, the three jurisdictions where BCCI headquarters operated from has finally received the requisite approval (the High Court approved the compensation scheme on 19th December, 1994; a Cayman Islands' court gave its approval on 13th January, 1995; a Luxembourg court approved the package on 31st January, 1995). Under the scheme BCCI's majority shareholders, the Government and ruling family of Abu Dhabi, must pay $1.8bn towards a global settlement fund over a period of three years. The courts' decision states that Abu Dhabi will be subject to the same terms as other creditors and will not be absolved from any future legal action brought by creditors as a result of the present compensation agreement. The initial payment of $1.55bn is calculated to reimburse some 250,000 creditors with payments equal to 20 per cent of their losses by this summer, however, such estimates are subject to a separate agreement worth $425m between BCCI's liquidators and the National Commercial Bank of Saudi Arabia which will not be decided upon by Luxembourg courts until 14th March at the earliest; if this deal is delayed the first payment could drop to 15 per cent. It is anticipated that the final dividend that creditors can expect to receive will be between 20 and 40 per cent, however, this is far from guaranteed due to on‐going litigation and problems in assessing the total number of creditors' claims.

Citation

Mahmood, S. (1995), "Current Developments in the BCCI Affair", Journal of Financial Crime, Vol. 3 No. 2, pp. 152-156. https://doi.org/10.1108/eb025696