The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Supreme Court has approved a transaction that will see Taylor Industries’ former owners make a $150,000 payment that could significantly boost recoveries for former staff of the insolvent retailer.

Court documents reveal that the monies, generated from the $2.335m sale of the merchant’s former Shirley Street headquarters, could potentially more than double recoveries for a liquidation estate whose preferential creditors include 43 former employees adjudged to be owed a combined $691,535 in termination pay and other benefits when the electrical retailer/contractor collapsed.

Andrew Davies, the Crowe Bahamas accountant, in an affidavit filed with the Supreme Court said the liquidation would receive the $150,000 from the Taylor and Mabon families in exchange for the 1.09 percent stake held by Taylor Industries in a company called Rolyat Ltd.

That latter entity, which formerly owned the Shirley Street head office, also holds Taylor Industries’ former Dunmore Street warehouse. With the latter property valued at $175,000, Mr Davies pegged the value of Taylor Industries’ Rolyat stake at just $2,000.

The other item to be exchanged for the $150,000 are the contracting tools owned by Taylor Industries which, valued at a similar four-figure sum, Mr Davies has been unable to sell in his capacity as liquidator. As a result, the Crowe Bahamas accountant argued that the insolvent retailer and its former employees will enjoy a significant six-figure gain on the deal.

And the now court-approved transaction will enable the Taylor Industries liquidation to be brought to a close much more quickly, saving time and money for preferential creditors, as the warehouse stake and tools represent the last remaining assets to be disposed of.

The Taylor Industries liquidation estate held $182,594 as at December 11, 2020. Some $64,000 in fees due to the liquidator and his attorneys, Lennox Paton, have been approved by the Supreme Court to be deducted from this amount as they do not work for free.

This would reduce the December 11, 2020, balance to around $118,000. However, the infusion of the $150,000 from Taylor Industries’ former owners will now likely more than double this amount to some $268,000, thus significantly improving the recovery prospects for preferential creditors - the Government and the former staff.

The Government is owed just over $18,000 in VAT and, once this is deducted, roughly $250,000 will likely be left for ex-staff. However, this sum is well short of the collective $697,000 they are owed, meaning they will recover ‘cents on the dollar’ or around 36 cents of every dollar that is owed to them.

Justifying the transfer in his affidavit, Mr Davies alleged: “I have received confirmation from the Taylor/Mabon family that they wish to make a personal contribution to the liquidation estate in the amount of $150,000 from their share of the sale of the Shirley Street property. This contribution of $150,000 is currently held in a client trust account with their attorney at the law firm, Alexiou, Knowles & Company.

“I had discussions with the Taylor/Mabon family regarding the practicality of accepting the $150,000 contribution in exchange for the official liquidator transferring the company’s shares in Rolyat back to the Rolyat treasury. This exchange would yield a significant net financial benefit to the liquidation estate...

“Considering the uncertain economic environment, this exchange makes practical sense for the efficiency of the liquidation as there will no longer be a need to wait until a buyer is found for the Dunmore Lane warehouse.”

Tribune Business understands that the necessary documents now have to be completed to effect the transaction, and exchange of the $150,000 for the warehouse stake and tools. Once the transfer is completed, Mr Davies will be able to pay “a first and final dividend” to the Government and former staff “without further extended delays in attempting to find buyers for [these] assets”.

Three Taylor Industries’ former management staff, all unnamed, are shown as being owed more than $68,000 each, with the highest due $71,571. More than five managerial staff were with the company over 20 years, and two for more than 30. Management are owed a collective $455,964 in severance and other benefits.

The $235,571 balance is due some 31 former line staff, two of whom had been with the company for more than 40 years. Taylor Industries’ owners had kept the operating business separate from the company’s real estate, holding them via different ownership structures, which enabled them to sell the Shirley Street building while closing the loss-making and insolvent 74 year-old retailer.

Kelly’s Home Centre, with an $11,895 claim, and a US supplier, Peninsular Electric Distribution from Florida, which is owed $134,750, will be unlikely to see a cent as unsecured creditors.

“The financial status of the unsecured creditors in the liquidation remains the same, which is there will be insufficient funds for them to receive a dividend,” Mr Davies wrote previously, implying that all the recoveries will go to the Government and former staff.

He also suggested that The Bahamas needed to establish a formal auction house to assist liquidators in disposing of assets more efficiently. “Because of its small size and relatively limited business environment, The Bahamas lacks various commercial options that may have assisted the liquidator in carrying out his duties,” Mr Davies wrote.

“The main one being a formal auction house where the assets the liquidator had available to sell could have been disposed of with possibly greater efficiencies, and reduced overall costs to the liquidation estate.

“The liquidator would like to highlight that while some of the assets owned by Taylor Industries had value when the company was operational, these assets ceased to have value in a liquidation scenario given the time and associated costs in attempting to sell them.”