Home' Trinidad and Tobago Guardian : February 9th 2017 Contents BG4 | COVER STORY
BUSINESS GUARDIAN guardian.co.tt FEBRUARY 9 • 2017
The economic down-
turn in T&T will
lead to an increase
in the number of
companies that go
and bankruptcy, says Varune Mun-
gal, managing director, Business Re-
covery and Advisory Services Ltd.
"I think we are going to see more
work in terms of the restructuring
aspect of what we do. This is based
on what is happening in the country
right now, the recession and the is-
sue of minimal work in the construc-
tion sector, the low energy prices and
the shortage of foreign exchange. All
of these factors compounded with
such big failures as Arcelor Mittal
will result in a domino effect that
would affect smaller companies,"
Mungal told the Business Guardian.
He said these smaller companies
may have been experiencing cash
flow problems over the last four to
five years but, because of the prob-
lems in the economy last 16 months,
these companies may be struggling
to stay afloat or even continue the
business they are accustomed to.
"Based on this, they will find
themselves in difficulty in meeting
payments to their respective finan-
cial institutions, to their creditors
and daily expenses. They may have
no other choice but to plead for a
proposal to restructure their com-
pany or else end up in bankruptcy.
What sometimes happen is a secured
creditor (usually a bank) may have
no choice but to place them in re-
Mungal spoke with the Business
Guardian on Monday at his office
His company specialises in the
restructuring of companies as well
as acting as a receiver and trustee
in bankruptcy cases, in accordance
with the Bankruptcy and Insolvency
"When a debenture is crystallised
as a secured creditor, they would
have to appoint a receiver to go in
and take charge of the assets that
were captured under the debenture
or the security instrument.
A debenture is a type of debt
instrument that is used to either
secure fixed and floating charged
assets of companies that are used
as collateral in loan arrangements.
Under the Companies Act, we
need to preserve the integrity of
the assets, so we would go in and
take possession of the assets, place
adequate security and ensure it is
appropriately covered in terms of
insurance and any types of risk,"
Mungal said if it is a manufac-
turing company, they may have to
streamline the company and con-
tinue operating it is as an unlimited
going concern and try to sell it in
"In some instances, we may have
no choice but to send home the
staff and shut down the company
immediately and put up the assets
for sale. When you liquidate the
assets then you have to distribute
the funds in order of priority. The
secured creditor most likely would
have a debenture over these assets
and they would probably rank first
priority out of those fixed charged
assets," he said.
Mungal said he worked from 1998
to 2012 in the recovery department
of a large accounting firm whose
name he did not want to mention,
in the business recovery and advi-
"I specialised in receivership, in-
solvencies and liquidation."
When Mungal left that company,
he saw the need in the market for an
"Based on what was beginning in
the economy at that time, I saw the
need for an independent practitioner
to service the banks who would be
cost efficient and providing the same
level of skills."
Mungal said there are five peo-
ple in the country, including him-
self, who hold the bankruptcy and
He has done 10 cases since 2012.
"These cases have been all differ-
ent. A receiver never works on the
same assignment twice. We have
done some manufacturing compa-
nies, a pig farm, a hotel in Tobago,
a media company, among others.
"I have noticed that a lot of the
times the directors and managers are
so close to the issues they do not re-
alise that they have financial issues.
They should be communicating with
the banks and they should share with
them what is going on," he said.
Mungal said many private indi-
viduals got caught in the boom up
to a few years ago, were over spend-
ing and now that the economy has
moved from boom to bust. "It is a
difficult transition for companies to
cut their expenditure leading to the
owners of the company landing up
in financial problems."
Continued on Page 5
says one of T&T's receivers
Business Recovery and Advisory Services Ltd.
PHOTO: SHIRLEY BAHADUR
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