The liquidator of the now-bankrupt FlowBank has revealed that it will fully pay first- and second-class claims to creditors, while the liquidation dividend for third-class claims will be between 70% and 80%. First- and second-class creditors have claims up to a maximum of CHF 100,000 per creditor.

Walder Wyss Ltd, appointed as FlowBank’s liquidator, accepted claims from the bankrupt firm's creditors in several categories: claims secured by pledge, first class, second class, third class, and bondholders.

Decision on Creditor Claims

While the liquidator approved a CHF 617,022 claim from a creditor secured by a pledge, it entirely rejected the claims of two creditors amounting to CHF 120,383. The liquidator also confirmed that, based on bank records, there are over CHF 2.2 million in second-class claims.

However, third-class claims consist of unsecured deposits from bank customers, along with all other claims not belonging to any other class.

According to the FlowBank liquidator, the total amount of claims filed in the third class is CHF 384.2 million, while the total amount admitted is CHF 424.4 million.

“This difference results from the fact that… the claims entered in the books are automatically collated without the need for them to be produced,” the liquidator’s report stated. “Furthermore, for clients whose privileged deposits have not yet been paid, the amount produced, when it is greater than CHF 100,000, appears in both the second and third class. The liquidators note that the total amount of productions rejected or recorded for the third class amounts to CHF 28,889,258.69.”

Furthermore, FlowBank bondholders submitted claims of about CHF 2.68 million, of which the liquidator accepted CHF 2.67 million.

The Sudden Fall of FlowBank

Switzerland’s Financial Market Supervisory Authority (FINMA) revoked FlowBank's operational licence on 13 June 2024 and initiated bankruptcy proceedings against the company. Geneva-based FlowBank operated as an online brokerage.

The regulatory action followed a period of scrutiny by the regulator from October 2021 for breaches of supervisory laws, particularly concerning capital requirements, organisational adequacy, and risk management. Although an external auditor was appointed in October 2022, the regulator alleged that the bank continued to violate capital ratio requirements and maintained deficiencies in various areas of its operations.

Meanwhile, the liquidator is still looking for buyers for the UK unit of London Capital Group, while it previously revealed plans to discontinue the operations of its sister entity in the Bahamas.

Source: Finance Magnates