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Liquid Option

July 16, 2009 (LBO) - Depositors of a collapsed Sri Lankan financial firm should seek its liquidation under civil law to realize assets while criminal proceedings may put pressure on directors surrender other assets, a senior lawyer has said.

"But in my view there is a limit to what could be realized and in my view that's not going to be a substantial realization."

While Golden Key Credit Card Company owes 26 billion rupees, two other troubled Ceylinco firms the F&G group - which includes a licensed finance company - and Ceylinco Shriram are also struggling to repay depositors.

Analysts estimate deposits at these firms to top 40 billion rupees.

"If there is a liquidation process then there is a responsibility to court of that liquidator carrying out asset realizations in a proper manner," says Goonewardene.

"Secondly somebody responsible is in charge."

Gunewardene was also appointed to the board of Ceylinco controlled Seylan Bank to stabilize its operations after the Golden Key triggered a run.

"What has happened is the directors have resigned or are unavailable or in prison. So there is no direction in any of those companies in terms of the realization at all," he says.

Directors of top Ceylinco firm

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