The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The principal and former receiver of a major Bahamian food retailer yesterday traded accusations that each had left the business “in shambles”, with both threatening to continue their verbal battle by filing more Supreme Court lawsuits.

In an escalating verbal war, Jeff Butler, owner of Freeport-based Butler’s Food World, alleged that the store’s former court-appointed receivers, HLB Galanis principal Philip Galanis and Chris Baker, had “no idea what they were doing” and effectively ran the business into the ground during the five months they had control.

Mr Butler threatened to sue the former receivers to recover the alleged losses his company had suffered during those five months, plus money the receivers had taken out in fees.

But, in response, Mr Galanis, the web shop gaming’ ‘Yes’ campaign co-ordinator, told Tribune Business that it was Mr Butler - not the receivers - who had “run it into the ground”.

Alleging that he and Mr Baker inherited “a shambles” after they took control on September 6, 2012, Mr Galanis said they took over unpaid bills such as a $400,000 sum owed to Grand Bahama Power Company, plus over $120,000 in unpaid rent due to Butler’s Food World’s landlord, Hannes Babak.

Mr Galanis told Tribune Business that Butler’s Food World would have been in even worse straits had the receivers taken out the fees due to them, and said they planned to sue Mr Butler to recover what was owed.

If he failed to pay, Mr Galanis said the receivers would petition the Supreme Court to wind-up Butler’s Food World. And he said of Mr Butler’s threat to sue them: “Bring it on.”

The Supreme Court-ordered receivership of Butler’s Food World was overturned last Thursday on a legal technicality, Justice Estelle Gray-Evans finding that attorneys acting for Mr Babak had failed to disclose their failure to properly serve Mr Butler’s counsel (see other article on Page 1B).

But, while Messrs Galanis and Baker were put out, the Supreme Court refused to overturn the $152,000 default judgment that Mr Babak and his company, L. T. Investments, had obtained against Butler’s Food World over alleged unpaid rent.

Mr Babak, who said he was consulting Tynes & Tynes over his next move following Thursday’s ruling, told Tribune Business last night that Mr Butler and his company owed him “around $250,000”.

Denying Mr Butler’s claims that he was the one owing money, the former Grand Bahama Port Authority (GBPA) and Freeport Concrete chairman said off his food store tenant: “He doesn’t pay his bills.”

Mr Babak added that he could have sought to put Butler’s Food World and its parent, Harbour Lobster and Fish Company, into liquidation or evicted them from his building, but chose receivership as the “most humane” option to avoid making around 100 Bahamians unemployed.

Still, the prospect of renewed legal action over the Butler’s Food World situation seemed high last night, with all parties ‘talking tough’.

Telling Tribune Business that he “should never have been” removed by the court-appointed receivers, Mr Butler said that under Messrs Galanis and Baker, the retailer’s sales “were down over $100,000 a week” year-over-year during the months of December and January.

Criticising the five months that it took the Supreme Court to make its ruling, Mr Butler alleged: “The receivers/managers have no experience of managing a business.

“All they did was take out money from the business, which was our working capital.”

Mr Butler said the retailer needed to invest $150,000 per week to maintain product inventory at the level to meet demand, but under the receivers Butler’s Food World had been investing an average of $60,000 - 40 per cent of what was required.

In the receivers’ last week, he alleged that this had dropped to $47,000, and asked: “Who can run a supermarket with $47,000 of product. You need $200,000 a week.

“I will be suing them [the receivers] to regain not only the losses, but their money. Our sales were down over $100,000 a week for December and January. They couldn’t order the product. They had no idea what they were doing.”

And Mr Butler further told Tribune Business: “We’ve increased our sales by 19 per cent in the first 48 hours, because I brought in five trailer loads of product.

“I had to dip into my own pocket to get product in, and tomorrow we are getting seven trailers. I just need product. We’ve got the reputation, we’ve got the staff.

“For example, Friday and Saturday in the last week under the receivers, the company did an average of $18,000 in sales. One week later, under my management, it increased to $27,000. We increased it from $18,000 to $27,000.”

Mr Butler said the receivers had let around 10 employees go, and acknowledged the need to hire more workers.

Also hitting at Mr Babak for the retailer’s plight, Mr Butler alleged: “Babak owes us a lot more than we ow him. He owed me for different things, probably around $200,000.”

Alleging that the receivership had caused Butler’s Food World “a tremendous amount” of harm, Mr Butler said: “They destroyed our credit, our credit lines throughout Florida, destroyed my personal credit by not paying credit cards which I used exclusively for the company. All that needs to be rebuilt.”

He expressed hope that March and April, normally good months because of Spring Break and the peak winter tourist season, would help the food retailer recover.

But, in a blistering riposte, Mr Galanis told Tribune Business: “Mr Butler was running it into the ground. He was not paying his bills to anyone.

“There was a $400,000 bill owed to Grand Bahama Power Company, and he had not paid rent in months. A judgment had been obtained against him because he was not paying his bills.”

Mr Galanis added: “The first thing we did was take a physical inventory. His books were in shambles, and if it was not for the receivers the company would not have remained as solvent as it did for as long as it did.

“We were able to allay the concerns of a multitude of creditor who he had not paid; a lot people.”

Mr Galanis said the receivers had been able to repay some of the $120,000 in past due rent allegedly owed to Mr Babak. They had also spoken to the Grand Bahama Power Company, which had terminated electricity supply, about resuming payments and had to replace a generator the store had been running off.

The former PLP MP and Senator alleged that Butler’s Food World’s revenue drop was because of how Mr Butler had managed it, and said the receivers’ report to the Supreme Court last November had exposed “the deplorable condition” the company was in.

Noting that they took the “unprecedented” step of letting Mr Butler continue in management during the receivership, so as to ensure continuity, Mr Galanis said his and Mr Baker’s fees were secured by a first charge over Butler’s Food World’s assets.

“The reason we did not take more out of the business was because we wanted to ensure its continued viability,” Mr Galanis told Tribune Business. “If we took all those funds, we would not have been able to buy inventory.

“All those claims he’s making have no basis in fact whatsoever. It was a right mess. The inventory had never been taken, the accounts were in shambles.”

Warning that the receivers would file a winding-up petition against Butler’s Food World if it failed to pay the receivers what they were owed, Mr Galanis added: “It’s his choice. We’re going to give him a very short time. We’re not going to be as patient as Mr Babak was with him.”

Mr Babak, meanwhile, said he was waiting to receive legal advice from Tynes and Tynes as to his next move.

Dismissing Mr Butler’s claims that he owed the retailer money as “a lame excuse” for the non-payment of rent, the Circle Mall owner added: “Everyone else has to pay rent.”

Mr Babak chose the option of putting Butler’s Food World into receivership over re-entering the premises and terminating the lease, or petitioning for the firm’s winding-up, because it preserved a “substantial” number of jobs rather than adding to Freeport’s already-high unemployment rate.