The Tribune

* Potential boost for ex-Taylor Industries staff

* Funds generated by $2.335m HQ disposal

* Bahamas urged to set up 'auction house'

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Taylor Industries owners have offered to pay $150,000 to help cover their former staff's termination pay and other benefits from the $2.335m generated by selling the collapsed firm's former head office.

The move by the Taylor and Mabon families was revealed by the firm's liquidator, who told the Supreme Court in his December 22, 2020, report he would seek its permission to accept the offer as part of a strategy to bring the firm's wind-up to a rapid close and avoid unnecessary expenses that could deplete recoveries for creditors.

Andrew Davies, the Crowe Bahamas accountant, said he planned to accept the offer in exchange for the last two Taylor Industries assets he has yet to dispose of. These are the insolvent company's electrical contracting tools, valued at between $5,000 to $10,000, and its 1.09 percent stake in an affiliated company, Rolyat Ltd.

The latter still owns the now-defunct 74 year-old electrical retailer and contractor's Dunmore Street warehouse, which has been valued at $200,000 and is presently listed for sale. Fearing that the sale "could take significant time to complete" amid COVID-19's economic depression, Mr Davies said exchanging Taylor Industries' $2,180 stake with the families will be the quickest way to monetise the asset.

"The liquidator has received notice that the Taylor/Mabon families would like to make a personal contribution of $150,000 to the Taylor Industries liquidation estate from their share of the proceeds of the sale of the Shirley Street property. The $150,000 is currently held in a client trust account of a Bahamian law firm," Mr Davies told the Supreme Court.

"The liquidator’s plan is that in exchange for accepting this $150,000 contribution, the liquidator will transfer Taylor Industries' shares in Rolyat Ltd (estimated value $2,180) and the electrical contracting tools (estimated value $5000 to $10,000) to the ownership of Rolyat Ltd.

"The Taylor/Mabon family have not requested this exchange; it is the liquidator’s proposal. The rationale behind this proposal is it will divest the liquidation estate of ownership of these two assets so the liquidation can advance to the next stage of the liquidation process, which is the payment of a dividend to creditors without further extended delays in attempting to find buyers for these assets."

Mr Davies said he would seek the Supreme Court's permission to effect such a deal, which would net a minimum $137,820 for creditors, as the Insolvency Act requires the judge's sanction "to transfer assets of an insolvent company to a person who is or was related to the company".

Rolyat Ltd, which is understood to be majority-controlled by the Taylor and Mabon families, also owned Taylor Industries' former headquarters building on Shirley Street. The latter property's sale has financed the promised $150,000 payment to the liquidator, which may help to at least partially compensate around 40 former Taylor Industries staff still waiting for their severance and other due sums.

Taylor Industries never owned the real estate from which it operated, and the two families appear to have received a potential multi-million dollar boost by shutting down a loss-making operating company and then selling-off the associated property thanks to holding it via a separate company they control.

While the full purchase price is not disclosed by Mr Davies' report, it can be calculated from the fact that the liquidator received $25,455 "less closing expenses" - such as the 6 percent realtor's commission, and 2.5 percent attorneys' fees - as Taylor Industries' 1.09 percent share.

Tribune Business previously reported that Rolyat's shareholders stood to make a potentially significant financial gain from selling the Shirley Street site, given that it sits on a major road in a prime commercial district near downtown Nassau. It also sits opposite Princess Margaret Hospital (PMH), and is near Doctors Hospital, both of which are thought to need more space.

Still, the former Taylor Industries owners are under no legal obligation to make the $150,000 payment, which would take the total value of assets realised by the liquidator to some $507,060 - a sum exceeding his original projection of $313,189 by 61.9 percent.

The former figure, though, is still some way short of the total $687,886 owed to former Taylor Industries employees in severance pay and other benefits. And the liquidator and his attorneys at Lennox Paton will likely apply to the Supreme Court to deduct their fees from this sum, reducing the creditor payout further.

Besides the employees, Mr Davies report names the other preferred creditor as the Department of Inland Revenue with $18,346 due in VAT from the final 2018 quarterly filing. He warned that 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, 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."

Mr Davies said several efforts to sell Taylor Industries' electrical contracting tools had fallen through, which was why the exchange with the Taylor and Mabon families was proving so attractive.

"The liquidator met with several of these prospective buyers. Various offers were made for the tools and verbal agreements made by the liquidator to sell at agreed prices, but none of the potential buyers were able to produce the required funds. The liquidator found this a time consuming and ultimately unproductive process," he said.

"The liquidator took the additional steps of contacting by telephone all of the major electrical contracting vendors in Nassau to ascertain if they were interested in the tools. All the electrical contractors the liquidator contacted either already had these tools or did not have the necessary funding available to buy them.

"The liquidator also contacted some of the major construction companies in Nassau to ascertain if they were interested in the tools. None of the companies contacted expressed an interest in buying the tools."