The lengthy time taken to complete corporate liquidations “reflects badly on the Bahamas as a jurisdiction”, a senior attorney warned, adding that a “significant” court ruling should help speed up insolvency processes.
Dr Peter Maynard said the verdict by Justice Stephen Isaacs, that liquidations started prior to last year’s new winding-up regime taking effect be continued under the old rules, would eliminate “additional delays” in numerous Bahamian insolvency proceedings.
He told Tribune Business that, compared to other countries, the Bahamas “needed to be more efficient” in bringing corporate insolvencies to a close, as the process seemed to take much longer in this nation.
“If one looks at the figures, the Bahamas seems to be rather late in resolving insolvencies compared to other jurisdictions,” Dr Maynard told this newspaper.
“We need to be more efficient in resolving insolvencies, and this [ruling] is one step by the courts in that direction – interpreting legislation that is quite clear, and which to us is very clear.”
The former Bahamas Bar Association head added: “I’m fundamentally concerned about compensating creditors rather than insolvencies lasting a long time, and returns being eroded by administrative costs.”
“Insolvencies should be more expedited in the Bahamas than is currently the case. It reflects badly on the Bahamas as a jurisdiction, because insolvencies take rather longer here than compared to other jurisdictions.
“Generally speaking, it should be a very efficient process, and we should be at the forefront of this rather than at the back end.
“We’ve been looking at this question of liquidations, as creditors cannot be expected to wait endlessly.”
Dr Maynard has experience in this, as he acts for creditors of both Gulf Union Bank (Bahamas) and Suisse Security Bank & Trust. The former was placed into liquidation in 1999, the latter in 2001, and both are still ongoing more than a decade later.
As to the substance of Justice Isaacs’ decision, Dr Maynard said it fully endorsed the view he had previously expressed to Tribune Business – that last year’s insolvency amendments and Companies Liquidation Rules 2012 did not apply to liquidations started prior to their enactment.
He took the position that the law was “unambiguous”, and that the ‘saving provisions’ of the Companies (Winding Up Amendment) Act 2011 applied to both the Gulf Union and Suisse Security liquidations.
Citing section 7 (2) (a) of that Act, Dr Maynard previously said this allowed liquidations either partially or wholly completed under the previous law to continue as if that legislation was still in force.
He told Tribune Business yesterday that this provision seemed “quite explicit” in the Act, but Justice Isaacs’ ruling had made it more so.
“The other side [the Gulf Union liquidators] were suggesting they would have to start all over again. That’s a waste of resources and a waste of time,” Dr Maynard said.
“It saves any additional delay in providing satisfaction to the creditors. It’s very significant in that the new liquidation rules should not carry over to the old insolvencies.
“It shows confidence by the court that it does carry over, and for creditors it’s a step in the right direction.”
Colin Jupp, another attorney at Dr Maynard’s law firm, told Tribune Business that the question of whether the new insolvency statute and rules applied to pre-existing liquidations had been coming up frequently.
Suggesting that Justice Isaacs’ ruling would provide clarity and eliminate any uncertainty, he said: “This has been coming up quite often in various liquidations.
“This Order that came down seems to give a light to the direction they [liquidators] and the courts should be taking on this matter.”
By Neil Hartnell,
The Tribune
