The Grand Court of the Cayman Islands has approved a petition for the winding up of Beechwood Re, a locally domiciled reinsurer that is being sued for fraud in the U.S and has ties to the hedge fund Platinum Partners, which collapsed after a federal investigation last year.
Grand Court Justice Nicholas Segal acknowledged evidence that Beechwood Re has had a “history of regulatory breaches,” appears to have been involved in a fraudulent scheme, and faces multiple lawsuits, Cayman Compass reported.
The reinsurer has financial ties to Platinum Partners, whose top executives and founder were arrested in December 2016 and are in an ongoing court battle against fraud charges by U.S. authorities, to which they’ve pleaded not guilty.
It has been alleged that the two entities share mutual beneficial owners, who enriched themselves by siphoning Beechwood Re assets that should have been distributed to other parties.
The reinsurer has since returned assets to clients, but the Cayman Islands Monetary Authority (CIMA) found that the company was likely to run out of funds to meet its obligations within several months.
This led CIMA to revoke Beechwood Re’s license and petition for the Grand Court to formally order the company to be wound up.
Deloitte controllers have been appointed as Beechwood Re’s liquidators and are allowed to participate in the multiple legal proceedings taking place in the U.S.