One of this country’s leading construction companies is teetering on the verge of bankruptcy with a weight of nearly $18 million in debt owed to creditors and millions more owed to it.
Barbados TODAY has discovered that Rotherley Construction Incorporated which filed an Insolvency Proposal with the Supervisor of Insolvency on January 22, 2019 that was later approved by its creditors, is still experiencing major difficulty paying its debts and collecting from those who owe the business for work completed.
The company, which had been operating for some 30 years, closed down in February 2019 after filing the insolvency plan to restructure the business and affairs of the firm with the expectation that the unsecured creditors would receive greater benefits than if Rotherley had gone into bankruptcy.
But the man who was hired by the company to draft the insolvency plan as its Trustee is describing efforts to settle the money issues as “very” frustrating and “exceedingly” lengthy.
Financial Consultant Dr Grenville Phillips has even put some of those who owe the company money on notice that he will be taking them to court in order to speed up collection of the debt which would help Rotherley to avoid triggering bankruptcy provisions in the Bankruptcy and Insolvency Act.
“There is a claim against a Government agency. That I understand is being processed; but without that claim being settled and other people who owe the company money…and we are going to have to go to court against some of these people for judgments to enforce it. Without that…the very reason why the company made a proposal to its creditors is because it had no money, it had run out of money. And unless the company can get money in from people who owe the company money, there is nothing which the company can do in the interim to pay its own creditors,” Dr Phillips disclosed in an exclusive interview this afternoon.
The Insolvency Proposal, a copy of which has been obtained by Barbados TODAY, names that Government agency as the National Housing Corporation (NHC) which owes Rotherley Construction some $2.45 million.
“The debtor undertook work on the Exmouth Towers project at the invitation of the NHC during the period February 2011 to December 2012. Shortly before the general election in 2013, the contract was terminated and awarded to another contractor. The debtor has a claim $2.45 million against the NHC. It is currently the subject of discussion with the Government of Barbados,” the proposal stated.
However, Dr Phillips said the company will not be suing the NHC because of the fact that the issue was under negotiations and he is optimistic it would be settled.
But he warned that settlement of the NHC debt to Rotherley Construction was crucial to help save the firm from going into bankruptcy thereby greatly disenfranchising its creditors.
In breaking down the claims against the building company, the proposal revealed that the secured creditor – the firm’s banker – is owed $5.5 million; preferred creditors $1.8 million; shareholder creditors $532,000 and unsecured creditors, $1.9 million, resulting in a total of $17.42 million.
Additionally, there is a contingent liability of $4 million against Rotherley to a financial institution which is the subject of ongoing negotiations for possible release or abatement. There are hopeful signs that the liability may be discharged to help in the construction company’s rehabilitation, according to the insolvency plan.
Other debts due by Rotherley include $300,000 to employees for wages and salaries and vacation pay, $788,000 to the NIS and $450,000 to the Barbados Revenue Authority (BRA) for Value Added Tax (VAT) and pay-as-you-earn (PAYE).
Conversely, BRA owes the firm some $830,000 in VAT refunds.
Dr Phillips also sought to stave off any suspicion from taking root regarding the establishment of a new company by two directors of Rotherley. He insisted that there was nothing underhand about it, explaining that the issue is outlined in the Insolvency Proposal.
In fact, he said the company known as Newco was intended to help bring in much-needed financing to assist Rotherley Construction.
When Barbados TODAY reached out to Financial Director of Rotherley Construction Kevin Burke, he said all of the workers who were sent home when the business closed two years ago got their severance through the Severance Payment Tribunal, but no other outstanding monies have yet been paid out. We are still in the process of collecting outstanding money,” Burke stated.
Commenting on the impact on employees, Dr Phillips said the people who remained most affected are the supervisory and management staff.