BCCI Pooling Agreement
BCCI Holdings in Luxembourg had two operating subsidiaries – BCCI SA in Luxembourg and BCCI Overseas in Grand Cayman – and it had more branches in the UK than in any other country.
This agreement provided that all the BCCI companies pooled their assets and said that they would relinquish any claims against each other and pay all their creditors on the same basis. The intermingling of BCCI SA and BCCI Holdings was such that it could have taken years to determine respective assets and liabilities.
While US law includes something called “substantive consolidation”, where under certain circumstances two or more companies will collapse together to form one liquidation, there is no such possibility under English law.
This agreement is believed to be the first of its kind and is not thought to have been mirrored since.
Majority Shareholders' Agreement
The majority shareholders in BCCI before its collapse were the rulers and the Sheikh of Abu Dhabi, and this deal, which was thrashed out in the first few months after the collapse, agreed that they would pay the liquidators $1.8bn (£1.25bn). It also resolved $2bn (£1.4bn) of proprietary claims.
This agreement was notoriously torpedoed by the Luxembourg court in the early 1990s, apparently on issues of public policy, and was appealed. Still the Luxembourg judges would not accept it, so the whole agreement had to be renegotiated before finally gaining court approval in 1995.
US Plea Agreement
This agreement provided that all the assets of BCCI companies in the US were forfeited to the US authorities. That was in exchange for the liquidators forfeiting half the assets to the Department of Justice and the other half being paid on terms to the liquidators.
The BCCI assets in the US were over $1bn (£695.6m) and were at risk of being lost in US fines and penalties. The US Federal Reserve also agreed not to enforce its announced $200m (£139m) penalty against BCCI and all pending and future criminal and civil proceedings against the bank in the US were settled.