The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Cavalier Construction’s liquidation was yesterday placed under Supreme Court supervision after the 64 year-old contractor’s insolvency was confirmed.

Once one of The Bahamas’ largest and best-known contractors, its winding-up under judicial oversight was approved by during a hearing before Justice Ian Winder given that its cash and other assets are insufficient to pay all creditors what they are owed.

Andrew Davies, the Crowe (Bahamas) partner and accountant, who is acting as Cavalier’s liquidator, confirmed the contractor’s insolvency in the winding-up petition that was filed with the Supreme Court on March 3, 2020. The hearing to place it under the court’s supervision was supposed to have taken place on March 24, but was delayed by the COVID-19 lockdown.

Cavalier’s directors and management resolved that the company be wound-up on February 18, 2020, at an Extraordinary General Meeting (EGM) at Cafe Channing Noelle in Caves Village.

Those present included Donald Thompson, president of Cavalier’s and Bobcat Bahamas’ parent, the Galaxy Group of Companies; Martin Todd, Cavalier’s managing director and Galaxy vice-president; Vernon Wells, Galaxy’s vice-chairman, and Sharon Ryan as company secretary.

The EGM took place almost one month after Tribune Business revealed on January 20 that Cavalier was closing down permanently and had already terminated its 54-strong staff.

“During the Extraordinary General Meeting it was determined that it was advisable to wind-up the company due to the fact that the company was insolvent or likely to become insolvent and could not continue to carry on its business,” Mr Davies said in the winding-up petition.

“The petitioner [Mr Davies] has carried out a preliminary investigation into the affairs of the company, including an examination of the books and records of the company, and is of the view that the company is likely insolvent and therefore required to be wound-up under the supervision of the court.”

Few other details have yet been made available. Mr Davies and his co-liquidator, fellow Crowe (Bahamas) accountant and partner, Kendrick Christie, will now have to inform all interested parties of Cavalier’s court-supervised winding-up and initiate a process for creditors to submit their financial claims against the company.

Tribune Business understands that FirstCaribbean International Bank (Bahamas) is the secured creditor and will head the queue, followed by the Government with its taxes and the employees.

The bank is thought to have a lien over the contractor’s Crawford Street property in Oakes Field, while the heavy-duty construction equipment that it and Bobcat (Bahamas) owned represents another potential source of recovery for creditors once it is sold.

Cavalier, in an earlier statement explaining its demise, admitted it had effectively been “cut out of the market” by the growing tendency of developers/investors to rely on construction management firms to oversee their projects.

These firms, Cavalier explained, tended to divide the construction work into “smaller packages” and then share it among multiple contractors and sub-contractors who often performed specialised tasks. As a result, the Bahamian construction market had shifted away from relying on one general contractor to perform all the necessary work.

Cavalier’s statement revealed that its business had been declining for several years as a result, leaving it unable to sustain its large workforce and high overhead costs. It cited a “significantly reduced turnover/workload” as the primary factor behind the decision to close its doors for good, and blamed its inability to restructure/downsize on the Employment Act’s prohibitive redundancy costs.

“The situation we find ourselves in now is primarily the result of the significantly reduced turnover/workload for the company, which we have been experiencing now for a number of years,” Cavalier said in January 2020.

“There has been a change in the construction market in the country, whereby the bigger projects previously carried out by the larger local general contractors, such as ourselves, are now typically carried out under construction management contracts.

“Under these arrangements, developers and owners employ a construction management team who then sub-contract smaller packages of work to contractors/sub-contractors. This business model effectively cuts the traditional general contractor out of the market,” Cavalier continued.

“Allied to this, as a company having a number of long-standing employees, we have simply not had the cash reserves needed to restructure our operations due to the significant financial cost/liability associated with this exercise as set out in the employment legislation.”

Cavalier’s explanation for its inability to downsize accordingly as business levels fell was also cited by Taylor Industries, the electrical contractor and appliances retailer, as one of the factors that drove its early 2019 closure and subsequent court-supervised liquidation - also being handled by Mr Davies.

Cavalier Construction was founded in 1956 by the late Godfrey Lightbourn and Eugene Pyfrom, who were 50/50 partners. They sold the business in the early 2000s to a management-led buyout, which was headed by late managing director, Richard Wilson.

Mr Wilson, who joined Cavalier in 1973 as chief estimator, was promoted to vice-president in 1989 and served as its managing director from 1989 until May 2018, when he stepped down due to ailing health. His passing was announced almost a year ago in late January 2019.

It is unclear why Cavalier hit difficulties so quickly following his death, but other senior management figures also departed the company shortly afterwards. Stephen D’Alewyn, its former chief financial officer, left on August 23 last year according to his Facebook and LinkedIn pages.

Among Cavalier’s major jobs in The Bahamas have been Albany, Bayroc, the Atlantis Convention Centre, Caves Point and the Nassau Straw Market.