SBEL Receiver sues Mike Feinstein for assets, including two airplanes, one valued at $1.52 million; Feinstein’s daughter responds on Facebook
BELIZE CITY, Monday, May 6, 2024
Two aircraft, one of them a 1980 Beech King Air F90 airplane valued at $1.52 million, and the other a 2018 Cessna 206H (value unknown), are among 130 items that Stake Bank Enterprises Limited (SBEL) (under receivership) is seeking via a lawsuit to seize from principal shareholder, Michael Feinstein. Also on the list is a used spud barge valued at $313,000; a couple cranes and 13 vehicles (among them, several late model SUVs); household furnishings and furniture. While the estimated value of many of those items has not been specified, the total value cited for all the items listed is $3,891,660. The 5-page list is described as non-exhaustive.
In the suit filed on April 30 by Senior Counsel Dean Barrow of Barrow & Williams LLP for the Receiver, Marlowe Neal of Neal & Associates Advisory Services Ltd. from Belmopan, Atlantic Bank Limited, which ordered the receivership, is named as an interested party. According to the statement of claim, Atlantic Bank offered SBEL “a structured syndicated credit facility of US $75 million on certain terms and conditions for the development of Stake Bank Island as a cruise ship port/docking facility and tourism village.” The Bank explains that the credit was formalized over the period August 2018 to 2021 during which the Bank says four facility letters were issued to and signed by Feinstein. The actual Mortgage Debenture was signed in January 2022.
The claim also reveals that to date, SBEL owes the bank a debt of BZ$62 million, which is the total progressive advancements provided for the development of the Port Coral project. Of course, it notes that interest is accruing based on the stipulations of the loan. The Bank now affirms that Feinstein’s actions have placed SBEL in a situation “where the value of the collateral securing the loan is no longer sufficient to cover the outstanding debt owed to the Bank.”
Barrow and Williams LLP further outlines the background to the suit, narrating that, because title to a 23.4-acre extension to the original Stake Bank Island of 16.085 acres was placed in Feinstein’s name and not in the name of the SBEL, the original island “… is inaccessible since it is hemmed in by the extension.” The claim outlines that this hinders the receiver from now completing the project and having the two outstanding piers built on the expanded portion to accommodate up to 4 Voyager class cruise ships at one time.
Barrow & Williams highlights that, based on the credit facility documents signed by Feinstein, the reclamation works for the expansion were part of the scope of the project as it was represented to banking officials. The statement reads, “Furthermore, the Business Plan explicitly enumerates certain machinery and equipment and the ‘filling of island’ as a significant initial cost.” Among the “intention”, which Barrow and Williams says emerges from the loan documents, is that loan funds would also go toward the purchase of a dredge, machinery, barges, cranes and other heavy equipment for the reclamation works. It was expected that the machinery and equipment “would become property of the company and would be subject to the charge created by the company in favour of the bank.” As it relates to title to the extension, the Bank says it was expected that this would be placed in the name of the Company “and would be subject to the charge created by the Company in favour of the Bank.”
Most importantly, the Bank is now seeking, via this lawsuit, for Feinstein to convey title to the extension to SBEL. It states that when the Mortgage Debenture was signed, Feinstein already had title to the extension in his name and did not disclose this to the Bank or to SBEL. They note that it was not until days after the receivership was acted upon that Feinstein, through his attorney, revealed that the title was in his personal name.
As it relates to the vehicles, the Claim indicates that Feinstein wrote back the receiver on April 15, 2024, stating that “though the vehicles were in the name of the Company, they belonged to him.” The suit adds that Feinstein said he placed the vehicles in the name of the Company “so he could avoid paying Customs duties, and that the Company was accordingly merely a trustee for him as the beneficial owner.” The Bank is now accusing Feinstein of breaching his fiduciary duties to them, as well as of depriving SBEL of other assets and halting its project, which has now led to loss and damage for SBEL. This, the receiver says, constitutes fraud, especially since Feinstein, as a company director, was and is a trustee of its assets, machinery and equipment. The receiver further argues that, because loan funds from Atlantic Bank were used to acquire the assets listed, these are the property of SBEL.
The receiver is asking the court to declare that Feinstein’s actions constitute misfeasance, breach of trust and/or breach of fiduciary duties, and that his possession of the other assets constitutes “conversion, detainment and or a trespass” upon the receiver’s goods. Among the raft of orders and damages sought by the receiver is restitution of the assets still in Feinstein’s possession, and damages for the trespass, conversion and detainment of the assets that are alienated. Other damages sought are for fraud and breach of fiduciary duties and stoppage of the project’s completion.
Importantly, the receiver is seeking an interim injunction restraining Feinstein from “parting with” or dealing in any way with the extension unless it is to convey title to the receiver.
Feinstein provides explanation for aircraft ownership
“Only foreigners should be entitled to owning a plane?” That is the question contained in a Facebook statement posted by Michael Feinstein’s daughter, Michaela Feinstein, today in response to a first publication elsewhere of details regarding the application for injunction and claim for assets to be returned by Feinstein.
The younger Feinstein reiterated a previous accusation that Atlantic Bank, which she says was a “supportive financier and stakeholder” of the Port Coral project, “prematurely instigated a receivership” in an attempt to “usurp control” of the project.
Speaking specifically about the plane ownership, she writes, “What may appear to some as excessive, for the Feinstein’s is the norm. 30 years of business development has its rewards. All of which is due to hard work. One plane and a few cars only meet the needs of some of the family business ventures. As already stated, the focus of this story is to mis direct these small assets which have nothing to do with the bigger issue of Atlantic Bank’s hostile takeover attempt.” She goes on to affirm that, “A Belizean owning one or more planes/jets should not be questioned much like a foreigner owning a jet. Success has its rewards.” She then pointed out that her father not only owns planes, but has been a pilot for five decades. The younger Feinstein then declared that the senior Feinstein “personally financed the acquisition of assets like vehicles and an airplane for his consulting team — expenditures typically covered by the company to aid an executive’s effectiveness.”
Michaela Feinstein also discloses in the Facebook statement that Atlantic Bank had a permanent financial controller at the SBEL office and they were responsible for “all fiduciary responsibilities and adhering to the project terms.” She also repeats a previous assertion that “Atlantic had a major presence” on the SBEL board.
