(Bloomberg) -- Cayman Islands-based Caledonian Bank Ltd. filed for bankruptcy in New York, saying a federal court’s freeze on its U.S. assets triggered a run on the bank by customers.

The U.S. Securities and Exchange Commission sued the bank Feb. 6 over claims it profited from stock sales of invalidly registered shell companies. The SEC won a court order the same day temporarily freezing the bank’s accounts at Northern Trust International Banking Corp. and Morgan Stanley Smith Barney LLC.

A subsequent waiver of the freeze didn’t calm customers who made “a substantially larger number of withdrawal requests than expected,” Caledonian said in court papers filed on Monday in bankruptcy court in Manhattan.

The asset freeze “had a crippling effect on debtor’s liquidity,” lawyers for the bank said in the filing.

The two U.S. accounts held about $300 million, out of total bank assets of $585 million, according to the filing. The bank’s $560 million in liabilities include $520 million payable to customers on demand, lawyers said in the filing.

Caledonian Bank filed for court protection under Chapter 15 of the Bankruptcy Code, which shields U.S. assets of insolvent companies overseas. The bank has about 1,550 customers and almost 1,900 active accounts. About 51 percent of its assets are in the U.S., according to the filing.

The case is In Re: Caledonian Bank Ltd., 15-10324, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

For more on this story go to: http://www.bloomberg.com/news/articles/2015-02-16/cayman-islands-caledonian-bank-files-for-bankruptcy-in-u-s-

Bahamas group to buy Caledonian Trust and Caledonian Directors Limited

For more on this story go to: http://www.offshore-bankers.net/article/19849/bahamas-group-to-buy-caledonian-trust-and-caledonian-directors-limited

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CIMA Appoints EY’s Hutchison and Loebell as Controllers of Caledonian Bank Limited
February 11, 2015 by ieyenews
CIMA Appoints EY’s Hutchison and Loebell as Controllers of Caledonian Bank Limited
This serves as statement on behalf of the Controllers, that The Cayman Islands Monetary Authority (“CIMA”) appointed Keiran Hutchison and Claire Loebell of Ernst & Young, Ltd. as Controllers of Caledonian Bank Limited (“CBL”) and Caledonian Securities Limited (“CSL”) on 10 February 2015. The appointment of the Controllers by CIMA vested immediate control of the affairs of CBL and CSL to the Controllers. The Controllers will report their initial findings concerning the affairs of CBL and CSL to both CIMA and the Grand Court of the Cayman Islands, and CIMA will then be in a position to determine what further action to take.
In the meantime, the operation of all services to the customers and clients of CBL remains suspended.
The Controllers are not appointed over any other entity within the Caledonian group of companies.
An update will be provided to stakeholders as soon as possible.
Enquiries can be directed by written correspondence to Barry McManus at barry.macmanus@ky.ey.com.

Release Wed 11 1015
Caledonian Securities Limited and Caledonian Bank Limited – In Controllership
The public is advised that effective 10th February 2015 the Cayman Islands Monetary Authority (“the Authority”) appointed Mr. Keiran Hutchison and Ms. Claire Loebell (“the Controllers”) of the firm of Ernst & Young Ltd., to assume control of the affairs of Caledonian Securities Limited (“CSL”) pursuant to section 17(2)(viii) of the Securities Investment Business Law (2011 Revision). On that same date, the Authority appointed Mr. Hutchison and Ms. Loebell to assume control of the affairs of Caledonian Bank Limited (“CBL” and, together with CSL, the “Licensees”) pursuant to section 18(1)(v) of the Banks and Trust Companies Law (2013 Revision).
Effective with this appointment the Controllers assumed immediate control of the affairs of CBL and have all the powers necessary, to the exclusion of any operator, to administer the affairs of CBL in the best interests of its depositors, investors, and creditors. The Controllers also assumed immediate control of the affairs of CSL and has all the powers necessary, to the exclusion of any operator, to administer the affairs of CSL in the best interests of its clients, investors, and creditors. The Controllers are also responsible for assessing the financial position of the Licensees and submitting a report to the Authority by a date to be specified.
Written enquiries to the Controllers should be forwarded to Barry MacManus by email at barry.macmanus@ky.ey.com or telephone (345) 814-8997.