Taylor Industries Insolvent By $1m

The Taylor Industries building on Shirley Street.

The Taylor Industries building on Shirley Street.


Tribune Business Editor


Taylor Industries is insolvent by $1m after racking up a combined $1.856m in losses during the four-and-a-half years prior to its January 8 closure, it has been revealed.

Andrew Davies, the Crowe Bahamas accountant, disclosed that the failed 74 year-old electrical retailer and contractor’s trade and unsecured creditors will recover none of the debts owed to them due to the massive solvency gap.

Appointed as the company’s liquidator by the Supreme Court, his first report on the company’s affairs reveals that only the government (VAT and taxes) and the 43 former Taylor Industries staff will recover any money from the firm’s winding-up.

The report, obtained by Tribune Business, shows the Shirley Street-based business had more than $600,000 in total assets when owners and management decided to close its doors just a week into the New Year.

The company’s own financial records pegged these at $601,848, while Mr Davies’ review attributed a slightly higher value of $615,599. However, the liquidator is estimating that just 46.8 percent of the latter sum - some $288,189 - will be recoverable during Taylor Industries’ winding-up.

As a result, given that total claims liabilities against the company amount to some $1.289m, Taylor Industries’ creditors face a massive $1m solvency gap in attempting to recover what is owed to them.

The liquidator’s report lists the $28,060 in VAT owed to the government, and collective $682,096 in termination pay due to Taylor Industries’ former staff, as “preferential claims”. This means that all the $288,189 in recoverable assets will go to them, and the trade and unsecured creditors owed a total $579,706 in accounts payables are unlikely to receive a cent.

The liquidator’s report reveals there are 37 Bahamian business/trade creditors owed a collective $80,713, with balances ranging from $16,116.50 down to $19.50. “The average local trade creditor balance equates to $2,181,” Mr Davies wrote. “The liquidator has been in communication with the largest local trade creditor but has had limited interaction with other creditors.”

Overseas creditors are owed $244,310, most of it due to three main suppliers. They are likely to be covered, though, by their trade insurance.

And, with the Government’s VAT for the 2018 fourth quarter leading the creditors’ queue, Tribune Business calculations suggest that the company’s former staff are likely to receive “cents on the dollar” rather than the full amount they are owed.

The figures suggest they could get around 38 cents of every $1 owed, but even this will probably end up being much less because the liquidator has to cover his and his attorneys’ fees from the remaining assets.

“Based on the liquidators’ estimate of the estimated receipts and subsequent available funds to disburse in the winding up the company, there will be no assets left to distribute to this class of creditor,” Mr Davies warned of the unsecured creditors.

“In order to save on costs and maximise returns for the preferential creditors, the liquidator proposes he seeks the approval of the courts to minimise time spent responding to these creditors and permission to forego running a formal claims process for this creditor group as would usually be required.”

The report also reveals that Taylor Industries’ former staff were initially unable to claim unemployment benefit from the National Insurance Board (NIB) because the company had become delinquent on its contributions. This was resolved when its majority owners, the Taylor family, paid the outstanding sum from their own personal funds.

“Management notified the liquidator that as a result of cash flow restrictions NIB contributions for the company had not been made for the months September 2018 to December 2018 inclusive, and the first week of January 2019,” Mr Davies revealed.

“The failure of the company to pay these contributions impacted the terminated employees’ ability to claim unemployment benefit from NIB. The amounts owed to NIB were subsequently paid directly by the Taylor family from personal funds in the first week of liquidation.”

Taylor Industries’ sudden closure came as a surprise to many but the company had been in financial difficulties for some time. The financials published with the liquidators’ report show it had consistently incurred net losses, mostly in the six-figure range and spread between a low of $77,793 and high of $748,408, during the four years to end-April 2018.

The business lost a further $443,746 in the eight months and one week leading up to its closure, and the liquidator’s report said: “Total comprehensive losses for this four-year period amounted to $1.412m with a corresponding reduction in total assets from $2.068m as at April 30, 2015, to $1.205m as at April 30, 2018.

“Total revenue between the year ended April 30, 2015, and April 30, 2018, declined by 36 percent [but] staff and related benefits remained constant over the same period [at between $1.3m to $1.4m].

“For the financial period May 1, 2018, to the commencement of liquidation (January 8, 2019) the company’s financial records showed.... a further reduction in total assets by $602,891. By the commencement of liquidation the company’s financial records show the company was still solvent based on the balance sheet definition of solvency, albeit the total assets were only $22,142 greater than the total liabilities. Management informed the liquidator that the company had last declared a dividend in 2012.”

Mr Davies, though, said the financial records did not account for the $682,000 termination pay that is now owed to all staff. The figures show a business that failed to align costs with falling revenues by downsizing and reducing its workforce, with the termination costs for employees - many of whom are long-serving - exceeding $70,000 in one individual case.

The termination sums were seen as cost prohibitive for a business losing such significant sums of money, creating an obstacle to downsizing and saving the business that proved impossible to overcome. Taylor Industries’ major shareholders, the Taylor and Mabon families, would have been reluctant to inject such capital given the real risk it would never have been recovered.

“Taylor Industries’ staff demographic contained many long-standing employees who, under Bahamian labour law, would have been entitled to significant termination pay for which the company did not have the cash reserves to meet as part of a restructuring exercise,” Mr Davies wrote.

Other sources of turnaround/restructuring financing proved equally hard to come by. The inability to raise commercial bank financing to fund “a reduction in head count” was cited by the liquidator’s report as one factor leading to Taylor Industries’ demise, while CIBC’s withdrawal of its overdraft facility further reduced working capital available to fund new inventory purchases.

The report added that there was also “a lack of non-core assets... that could have been divested to fund a reduction in head count in line with the reduced level of sales”. Taylor Industries did not own its real estate, which included a Dunmore Street warehouse as well as the Shirley Street headquarters, meaning “sale and leaseback” deals to raise capital were not available to it.

Both properties are owned by the Taylor family via another company, meaning Taylor Industries was essentially an operating business that owned few physical assets. Its insolvency means another long-established brand new in the Bahamian retail industry is no more, much like John S George and City Markets, and raises as to how many other Bahamian-owned businesses of similar size are going through the same struggles in a bid to survive.

The liquidator’s report echoes Taylor Industries’ previous comments to Tribune Business about the reasons for its closure, citing a perfect storm of internal and macroeconomic factors. Some observers, though, felt it had become a tired brand that failed to adjust to the transformation in how retail commerce is conducted - especially the transition to online shopping.

This was cited as one factor behind Taylor Industries’ end, together with the VAT rate increase to 12 percent; having to still pay Business Licence fees despite making substantial losses; the reduction in electrical contracting work due to the economic slowdown; and a reduction in working capital resulting from the consistent net losses.

Detailing the potential sources of recovery for creditors besides cash left in Taylor Industries’ bank account with CIBC FirstCaribbean International Bank (Bahamas), Mr Davies is estimating that just $75,000 or 39.5 percent of the company’s outstanding accounts receivables will be recovered in the liquidation.

This represents monies owed to the electrical contractor/retailer at the date of its closure, but Mr Davies suggested that more than $113,000 of this $189,851 sum would either be impossible or too expensive and time consuming to recover, thereby representing an unjustifiable drain on already scarce resources.

“Efforts have already been made to obtain payment from customers who owe Taylor Industries for services or products provided prior to the commencement of liquidation,” Mr Davies wrote. “As at the commencement of the liquidation, management provided the liquidator with an accounts receivable listing that showed a total amount owing of $189,851.

“Of this total, $85,287 were over 90-days past due and $27,949 were for amounts less than $500. Due to the cash flow issues the company had been experiencing, management had been making a concerted effort to collect their receivables with varying results.

“As at the date of this report, the liquidator has managed to get in $1,647 of this receivable balance since the commencement of liquidation. As many of the amounts owed are very old or relatively small, the Liquidator should be mindful of the time, costs and corresponding expense involved in pursuing smaller debts for a net loss to the liquidation estate.”

Mr Davies added that he would only pursue legal action against Taylor Industries’ attorneys if advised by his attorneys at Lennox Paton that “he has a very strong case, the amounts owed are of sufficient quantum, and any judgments that may be won are considered recoverable”.

Taylor Industries’ remaining inventory of appliances and electrical parts is identified as the best source of creditor recoveries, but even here the liquidator estimates that the $314,515 worth of product shown in the company’s accounts will only realise around one-third of this sum at sale.

Separating the inventory into retail products and electrical/repair parts, Mr Davies is forecasting that he will recover between $100,000 to $125,000 for creditors. “With respect to the retail products, the liquidator proposes the implementation of a two-to-three day liquidation sale that is widely advertised to the public with deep discounts in order to sell as many of the retail items as possible,” Mr Davies wrote.

“Any remaining retail items can be offered on a wholesale basis to any suitable retail outlet that the liquidator can identify. A sale to the public would not be suitable for inventory that is generally purchased by electrical contractors and repair companies.

“For these items the liquidator recommends they are sold on a wholesale basis to other retail or wholesale outlets who are pre-selected and have expressed an interest in buying in bulk. Sales of these items would go to the highest bidder with offers backed by non-refundable deposits for those whose bid is successful.”

Taylor Industries’ seven-strong vehicle fleet had a collective $53,000 insurable value, and $48,549 depreciated value, at the time of the company’s January 8, 2019, closure. Mr Davies is forecasting that he will realise $40,000 from their sale via a sealed bid auction, with non-refundable deposits required to “dissuade buyers who aren’t serious or lack the financial capacity to complete the deal”.


Well_mudda_take_sic 1 year, 8 months ago

Another local business bites the dust....many more to follow.

Meanwhile our Minnis-led FNM government is busy catering to every want and need of foreign investors and the wealthiest greedy few in our society, many of whom are well connected and established within the Lyford Cay community.


Islandboy242242 1 year, 8 months ago

Sad case study for Bahamian businesses, is anyone in power listening though? Every year in March they talk about changing the Business License calculations from basing off Revenue to Net Income but still nothing.


DonAnthony 1 year, 8 months ago

So true. Business license fees should be calculated on net income not gross. This should have been corrected years ago. Also lower business license fees for companies that list their shares on BISX so the public can share in the success of this country as well. This would help lessen income inequality. Scotiabank does not offer shares to the Bahamian public but commonwealth bank does. Commonwealth bank should be rewarded for giving all Bahamians an opportunity to share in their success. Sadly, no one in govt has any vision or guts so will probably never happen.


John 1 year, 8 months ago

I guess you'all didn't read Marlon Johnson yesterday. He say a task force is about to start investigating businesses and business licenses and VAT reportings by businesses because they believe both are being under reported by many businesses. This is partly because of the great fall off in both business license fees and vat revenue after the vat was increased by 60% last year. So they are about to launch another assault on businesses.


TheMadHatter 1 year, 8 months ago

What do they mean they short a cool million? Dont they have a Consolidated Fund like government? Govt money never runs out.


DDK 1 year, 8 months ago

The bottom line is neither this government nor its predecessors give/gave a flying fig about the struggle for survival of business in today's economic climate, unless such business is owned by one of their politically elite brothers, sisters or cronies. Government views business in the Bahamas as its cash cow and the labour laws offer no protection whatsoever for the business operator. They had better buck up before the only commerce around will be out of the boot of a car or in the shanty towns.


hrysippus 1 year, 8 months ago

The idiocy of the business license tax is well known but the elephant in the room continues to be the cost involved in terminating employees, particularly those who have been employed for a long time, Taylor Industries had a liability of $682,000 to terminate employees. Ludicrous. And if you continue to employ these workers another few years and they reach retirement age then suddenly and miraculously the employer owes them nothing. This situation will lead to many more long standing businesses having to declare bankruptcy because they are insolvent due to this employee termination liability. This is the fault of cabinet ministers pandering to workers at the expense of businesses in order to gain votes and be re-elected. The ministers retire on fat pensions and workers are left with fewer jobs. Socialist policies are great until a government runs out of other people's money to spend. Sigh...…..


TalRussell 1 year, 8 months ago

Yes, yes but name comrade(s) who are "real" beneficial owners the land the Taylor Industries building sits on, on Shirley Street, yes, no..... Truth is 50% of all today's major business operating across Colony of Out Islands, will go out business steadily over next 30 years, yes, no..... Just count how many businesses did not make their 26th - 30th year in business, yes, no?


John 1 year, 8 months ago

There are many more "Taylor Industries" out there just on the brink of closing. And government, in their ignorance or misinformation, continues to tighten up the screws and speed up the process. since 2008, many businesses were only surviving because the owners and/or shareholders continuously pumped thousands or even millions of dollars into the company, only hoping that one day the company would only break even, if not turn a profit. But day after day, month after month, year after year, they saw declining sales, losses that could not be contained and less prospects that they could turn the business around or continue to support it financially. And some tried venturing into other businesses and others tried to downsize and for some the only other alternative is to close and lock the front door, For good. The major purpose is to make a profit and once that objective cannot be achieved, even in the long term, then all other objectives become moot, at least eventually. And while tourism may be booming, it is an economy that no longer or barely supports the local economy. Most of the tourist industry is off shore and hardly even transacted in Bahamian dollars or not even converted to Bahamian currency nd when all these


bogart 1 year, 8 months ago



sealice 1 year, 8 months ago

This is all part of the Gubmint man dem's plan to ruin the economy by shutting down Bahamian business so we have no choice but caricom and WTO and no chance at being unique and Bahamians. Somehow any government of the Bahamas talks Bahamian Business and then turns around and sells the land from under our feet!!


akbar 1 year, 8 months ago

While the government policies may have some contributing factors but this a private business . It was either being run poorly or like many older businesses in this country refuse to adjust their business model in this age of technology. It may be also after 74 years it was time to exit. My sympathy goes with the line staff and hope that for the most part they are able to adjust. Most private businesses in this country just like the government...no innovation and customer service sucks. This family been eating well for 74 years ,after all that time they should of had a better exit strategy than this. No excuse. And plus don't sound like they weren't paying any NI contributions.


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