Firms break BCCI deadlock

TWO London firms have cracked the sixth-month negotiations between former employees of the collapsed Bank of Credit and Commerce International and the bank's liquidators.

The settlement means the ex-employees can withdraw their leave for legal action in return for payments totalling US$70 million.

The money will go into two trusts: US$50 million to a trust on behalf of all BCCI staff and their families, the rest to settle outstanding staff loans from BCCI.

The liquidators, Touche Ross, had faced two actions from the former employees. The UK action related to the allegedly unlawful transfer of shares in BCCI Holdings owned by the ICIC Staff Benefit Fund.

In 1985 BCCI suffered huge treasury trading losses and shares were allegedly unlawfully sold at the expense of the staff benefit fund.

The second action, a Luxembourg-based appeal, related to the liquidators' proposed settlement with the Abu Dhabi shareholders. The settlement is based on a US$1.8 billion payment from the Abu Dhabi government, BCCI's principal shareholder.

The employees have agreed to withdraw their appeal, but the final decision will be made in the Luxembourg court on 16 November.

A Manches & Co team led by litigation partner Charles Gordon represented members of the BCCI Campaign Committee. Another 40-strong group of ex-employees were represented by Timothy Bunyard, principal of north London practice Hallewell Bunyard.

Gordon and Bunyard say their clients are pleased with the outcome.

“It was a complex piece of litigation and the negotiations to resolve it have been very complex,” said Gordon, who has been dealing with the litigation for the past three years.

He added that the creditors are still hanging on for decisive court hearings in London and the Cayman Islands.

Bunyard, who took on the case two years ago, said of the decision: “I am delighted with it. It's an extremely good settlement.”

Peter Horrocks, head of insolvency at Lovell White Durrant and representing the liquidators, said: “As far as we are concerned, we hope we have settled the differences between staff and BCCI. It's a pity the Abu Dhabi settlement has been caught up with delays through appeals lodged in the Luxembourg Court, which substantially delayed payment of dividends to creditors.”