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Contrary to traditional bank failure, the offshore financial industry is subject to strict regulatory scrutiny and contains a distinct risk profile in the global financial arena. Even though offshore financial institutions are often very well capitalized, the general structure of the overall financial industry allows for liquidity mismatches. Since offshore bank failure can be triggered by several reasons, the well-capitalized structure of the financial institution is easily set aside and downplayed in case of default. A forced closedown of an offshore bank mostly results from regulatory breaches or violations of international standards. As such, the procedures to restart operations or dismantle the bank differ greatly from traditional resolution at the expense of its creditors.

All creditors – often considered victims – of offshore bank failure have one thing in common: they want their money back – now! The abrupt and unexpected event leads to uncertainty and sometimes panic. Especially when these assets serve a specific purpose, like pension savings, shared investments, or corporate work capital. Therefore, legitimate creditors absolutely need strategies and tactics competing claimants don’t think about. This is mission critical in matters of liquidity shortages where creditors are forced to accept a write-down of their outstanding account balance and investment.

Bank closures reveal a considerable conflict between regulators, financial institutions and creditors. All stakeholders wish to limit their risk and maximize their outcome. Yet, their desired outcomes are divers. Regulators want to maintain confidence in the financial system and exclude wrongdoers. Financial institutions wish to avoid sanctions and continue their operations. Creditors, including legitimate bank customers just want to continue with their lives as if nothing happened and they are still in control of their investment.

The website offshore bank failure and the services provided by Legal Floris LLC have a focus on natural persons and international business corporations who got stuck in the often indecipherable rules to reclaim their assets. To avoid stress, worry, anxiety and unpredictability, a clear, consistent, reliable and predictable recovery plan is needed for this group of customers. A group that we often describe as being ‘too large for the napkin and too small for the tablecloth’. Their outstanding credit is too large to ignore whilst they need specialist assistance to recover their blocked assets. They simply cannot afford to engage ineffective strategies. This, again, is furthered by public measures for creditor protection and insolvency frameworks that disable second chances.

For unaware and legitimate creditors, it feels unfair to be sucked into the legal battles between an alleged criminal enterprise and its powerful regulator. The contractual relationship between financial institutions and their customers is covered by the law. Regulatory intervention is not part of this relationship and leaves creditors empty handed in case of default. To mitigate risk for creditors, most countries installed investor protection and deposit guarantee schemes.

The initial stages of (offshore) bank failure are characterized by uncertainty. This uncertainty is increased by the limited and biased information provisioning by the parties involved. The result is that creditors are kept unaware of the actual liquidity position of the financial institution and the expected downside risk. Therefore, creditors should consider every possible option to reclaim their funds, especially when the outstanding credit is higher than the maximum level of protection. As such, creditors can file several claims to come to total compensations and indemnification.

Bank closure follows a pre-defined schedule that combines deposit protection, with traditional contract and insolvency laws and recovery and resolution directives. Each step in the process stands on itself and provides qualifying creditors with a framework to file their claim within a specific timeframe. Rejections are possible and failure to comply with the instructions are at the expense of the creditor. It shows that bank recovery is a lengthy and hazardous process that requires a proven long term strategy. As such, Legal Floris LLC provides for a staged information provisioning, advisory funnel and recovery process that helps creditors in offshore bank failure to come to maximum recovery:

Bank Failures: the closure of the financial institutions determines the appropriate resolution structure. This involves administration, resolution and recovery, often completed by insolvency procedures. The appropriate information allows the creditor to assess risk and strategize accordingly. Find out more on Bank Failures here. 

Reactivate My Offshore Company: financial institutions have, among others, legal entities incorporated in offshore financial centers as their customers. The separation of the legal entity from its owners works both ways. There is limited liability for shareholders and simultaneously, the beneficial owners of such a company have no direct rights of ownership to the corporate assets. In most cases of fund recovery, restoration of the legal person is required to comply with the requirements for recovery. Read more about Reactivate My Offshore Company.

Deposit Guarantee Claim: deposit protection aims to maintain public confidence in the financial system by providing bank customers with a swift resolution and access to a capped amount of coverage. Domestic deposit guarantee schemes (DGS) have their own structure, funding mechanism and applicability. As such, not every creditor is eligible for DGS compensation. More on Deposit Guarantee Claim.

Bank Liquidation: after deposit protection comes bank liquidation. This is often the last resort of creditors. Failure to file a proof of claim or proof of debt leads to creditor disqualification and potential loss of funds. Read more on Bank Liquidation.

Default Capital Management: in collaboration with liquidators and administrators, we aim to improve the position of creditors by utilizing corporate assets for the benefit of our clients. The objective is to create a win-win situation for the liquidation of the bank and its creditors. More on Default Capital Management.