Home' Trinidad and Tobago Guardian : July 20th 2014 Contents SBG4 COVER STORY
SUNDAY BUSINESS GUARDIAN www.guardian.co.tt JULY 20 • 2014
Less than ten minutes into a
50-minute interview on the
new bankruptcy and insol-
vency law that was pro-
claimed by President
Anthony Carmona on May
26, Finance Minister Larry
Howai brings up the issue
of TCL, the Claxton Bay-based cement pro-
ducer that went through a near-death expe-
rience three years ago.
Howai is explaining how the legislation---
which was initially piloted through Parliament
in 2006 by deceased Trade Minister Ken Valley
who was praised for his work---would impact
on companies that find themselves in financial
"Now you have the potential for continuing
to operate a business and petitioning the court
to protect you from your creditors so that you
can restructure your business and come up
with a business plan. You can hold off your
creditors while doing so, on a structured basis---
it s not as if it can be used to avoid creditors."
"The law follows modern precedent in the
UK and Canada about how you would help
to keep a business going in the event it ran
into difficulties. We may get a big test just
now with our cement manufacturer." With
these words, the minister---known as a serious,
even dour character---breaks into chuckles and
After this mirth subsides, he is asked whether
it is a coincidence that the legislation was
proclaimed at this time when one of the coun-
try s largest and most regionally focused man-
ufacturers is once again facing financial dif-
Is this a Section 34 repeat?
Howai said: "Certainly, TCL was nowhere
on our minds at the time we started this exer-
cise some months ago and trying to fasttrack
it. The genesis of the legislation was from the
Ministry of Trade, which is concerned about
improving the ease of doing business in T&T
and moving the country up the annual, global
ranking produced by the World Bank.
"But it was after it was implemented I was
saying to myself, ironically, that this is a good
time to do it. You don t want to do it in the
middle of when the economy is going through
trouble. You want to test it out in normal
times and with a small and uncomplicated
case," the minister said, citing the case of a
pig farmer who has some financial problems.
"It suddenly dawned on me subsequently
from all of this talk I am seeing in the media
about TCL, that I may get a test that I hope
we would have all of the logisitical support in
place to deal with."
Howai then explains the logistical support
that has been put in place to ensure that the
bankruptcy infrastructure is in place.
Firstly, a senior analyst from the Ministry
of Finance, Savitri Ramsaran, is being tem-
porarily used as the Supervisor of Insolvency,
the public office that is responsible to the
Minister for the general administration of the
"The reason we are doing that is that public
service procurement tends to be very com-
plicated. Hiring the person needed to go
through the Public Service Commission and
the establishment of the salary may have to
go through the Salary Review Commission
because it s a new post."
Howai explained that the process of hiring
a permanent Supervisor of Insolvency may
take the ministry six to nine months more,
which meant that he had the option of not
placing anyone while the bureaucracy estab-
lished the position.
The other decision he took was to hire an
external firm of lawyers, JD Sellier, to assist
and advise the in-house Supervisor, while the
structures, competencies and skills are put in
The Government got help in drafting the
regulations for the bankruptcy and insolvency
legislation from the International Finance Cor-
poration---a member of the World Bank Group
that offers investment, advisory, and asset
management services to encourage private
sector development in developing countries.
The choice of the IFC was partly because
the institution has a great deal of knowledge
and experience with the implementation of
bankruptcy legislation and also because to
have gone through the traditional bureacracy
would have been slower.
"If I tried to do it by going to the Central
Tenders Board, I would probably now be mak-
ing the decision on which consultant to use
and hopefully by the end of the year or early
next year we would had something to imple-
ment," Howai said.
The minister said he wanted to use what
he thought would be a period of relative cor-
porate normalcy and calm to implement the
infrastructure of the Bankruptcy and Insolvency
Act---which includes liaising with the Comp-
troller of Accounts and the Judiciary, estab-
lishing forms and processes.
Howai said: "I was there feeling good that
nothing complicated was likely to come up.
Now, of course, I am having nightmares that
I could potentially could end up with this
massive thing that we never envisaged and I
don t know if we have enough skills and expe-
rience to deal with this as the first one.
"It is something that I am going to have at
some stage face or deal with, but thank God
that for the time being it does not appear to
At that point, the interview is interrupted
by a staffer from the Ministry of Finance who
said that she had been advised by another
ministry employee that the TCL matter was
sub judice (referring to the injunction that
shareholders of the cement producer sought
in July 2013 to prevent the company from pro-
ceeding to hold its annual meeting without
considering a request to place their five rep-
resentatives on the ballot for election as direc-
Howai added: "We do not intend to com-
promise any issue that is before the Court."
Questioned on whether the current ban-
ruptcy architecture was ready for a big and
complicated case, the minister said: "I do not
think that we are ready right now. We are still
making sure that we understand all of the
processes. We are working with the consultants
who drafted the regulations."
Howai said the ministry s staff is not "com-
fortable that it is completely up to speed with
regard to the skills and experience and under-
standing all of the nuances and issues that
are likely to come up.
"It is going to take a little while to build
that capability within the ministry, which is
why I have outsourced some of the legal assis-
tance to help with that whole process."
It is the intention of the ministry to put in
place a regime of training to ensure that the
ministry employees know as much of the law
and practice of bankruptcy and insolvency as
possible, Howai said.
"I suspect that the best form of training is
working with the lawyers while they are dealing
with live issues; asking questions and coming
up to speed," said the minister, adding that it
was an exciting time for the ministry as it was
dealing with a whole new modern regime of
bankruptcy protection that is being introduced
for the first time.
The takeaway for the man-in-the-street,
Howai said, is that T&T now has a law, regime
and capacity to ensure that businesses do not
have to go under whenever they run into finan-
Asked whether the new regime places cred-
itors at a disadvantage, Howai said that in
some instances the new law could work to
the advantage of banks and other providers
The minister contrasted the new regime
with the previous one where companies it
financial trouble were placed into receiver-
"My experience of receivership---and I was
the receiver for 23 companies at my time at
First Citizens---I always found that you got
nothing at the end of the day. Receivership
did not create value. It destroyed value.
"This new regime allows companies to
restructure and allows the business to preserve
its goodwill, its customers as well as its equip-
ment---all of the ancilliary things that a receiver
does not get control of."
Howai said that if companies are able to
keep the brand going, along with the customer
base, the possibility of creditors getting a better
proportion of their loans back is increased,
which may actually strengthen the banking
The minister said he has been thinking about
the impact of bankruptcy legislation on the
dissolution of the CL Financial empire.
"My initial sense is that it probably would
have helped to preserve things in a much better
way than happened," he said, explaining that
the regime that was in place in January 2009
when CL Financial collapsed was "neither fish
nor fowl." He said that liquidation or the
appointment of a receiver in that case would
have been difficult.
The legislation allows for managements to
be retained under bankruptcy protection, but
it also allows for new managers, Howai said.
He noted thatpart of the push for the new
legislation came from the Minister of Trade,
"Minister Bharath stumbled on the fact that
one of the things that affected us is that we
did not have modern bankruptcy legislation
Howai---who praised the role of deceased
PNM minister Ken Valley, who initially piloted
the bill through parliament---said the lack of
the legislation was one of the first issues raised
by New York investment bankers who the
Government was having talking to about mak-
ing T&T a dispute resolution centre.
TCL giving me bankruptcy
Finance Minister Larry Howai
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