Sabrina N. Gordon, Business Reporter

Damien King, chairman of Dyoll Group, says the lawsuit was a surprise, but confident the group's actions are defendable. - File

The joint liquidators for Dyoll Insurance Company, have sued the company's former parent, Dyoll Group, for $116.9 million, saying the figure represented overcharged manage-ment fees.

The surprise lawsuit, filed jointly by John Lee of Jamaica and Ken Krys of Cayman Island, has effectively stalled a special meeting of Dyoll Group shareholders that was scheduled for Friday. The meeting was expected to facilitate a vote on the winding up of the company, which, up to September 2006, had an accumulated deficit of $82 million.

The company, citing cash-flow problems, has not produced any financial reports since.

Lee said the suit was filed more than one month ago.

"The group has overcharged Dyoll," he commented to Wednes-day Business, noting that the fees did not match the advisory service delivered under terms previously agreed.

Dyoll Group chairman, Dr. Damien King, said the company was advised of the suit a few weeks ago.

"The filing of a lawsuit could not have been predicted with any form of accuracy," said Dr. King. "It comes as a surprise on the basis that, in our view, we have responded adequately to the claims presented."

Dyoll Insurance was the main subsidiary of Dyoll Group up to early 2005 when Jamaican regulator, the Financial Services Commission, took control of the company after a swarm of hurricane claims left it struggling to pay its debts. With its main revenue earner in trouble, the group's finances also began to wane, with its losses mounting to $138 million at one stage. The lawsuit comes up for hearing in the Supreme Court in November.

Professional advice

Dyoll Group, under the signature of company secretary Fay Chang-Rhule, said in a press advertise-ment that the board would have to seek professional advice on the way ahead "to ensure full complicity" with provisions of the Companies Act before proceeding with plans for voluntary liquidation.

The company, in a stock-exchange filing, said the lawsuit could eat into available resources, but noted that it had funds in the kitty to cover the claim if the court awards damage against the group.

"Unfortunately, this claim, if successful, would materially affect the issue of solvency, though it would not necessarily make the company insolvent, given that the company holds a judgment debt in the order of US$3 million against Drax Hall Limited, which is secured by a registered charge against the Drax Hall estate lands," said Dyoll.

The judgement debt converts to about $210 million.

King says, however, that Dyoll Group's behaviour was proper and defendable.

A new date for the extraordinary general meeting would be considered after the November hearings, the company said.

sabrina.gordon@gleanerjm.com