Given the fact that TCL has admitted that it cannot pay its debts as they fall due, and may have committed an act of bankruptcy in January 2011, all it takes for TCL to be cast in concrete, for "one or more creditors: to file a petition in the court for a receiving order against the company.
T&T's Bankruptcy and Insolvency Act, which was assented to in September 2007, states that a debtor commits an act of bankruptcy where, among other things, he "exhibits to any meeting of his creditors any statement of his assets and liabilities that shows he is insolvent, or presents or causes to be presented to that meeting a written admission of his inability to pay his debts."
A debtor also commits an act of bankruptcy where he "gives notice to any of his creditors that he has suspended or is about to suspend payment of his debts." On January 18, 2011, Trinidad Cement Ltd announced that had declared a "moratorium on debt service payments (both principal and interest) in order to preserve cash to sustain operations" as it proposed to undertake a debt-restructuring exercise with its creditors.
On the face of it, that notice to the TCL shareholders more than 15 months ago constitutes evidence that TCL has committed an act of bankruptcy, in that the company would have indicated to its creditors that it was unable to pay its debts as they became due, and TCL suspended the payment of its debts as it sought to put in place an arrangement to avoid the bunching of its loans.
While there is no evidence that the Bankruptcy and Insolvency Act has been proclaimed, much of what that law does is codify existing practice and the common law as it pertains to bankruptcy situations and insolvent companies. Given the fact that TCL has admitted that it cannot pay its debts as they fall due, and may have committed an act of bankruptcy in January 2011, all it takes for TCL to be cast in concrete, as it were, is for "one or more creditors" to file a petition in court for a receiving order against the company.
There are four reasons why TCL's creditors may be holding their hands from petitioning the court for a receiving order against the cement producer: Firstly, a bankruptcy petition would cause extreme disruption to T&T's manufacturing and construction sectors, leading to hundreds if not thousands of workers being retrenched and the entire construction sector grinding to a halt; Secondly, the disruption that may be experienced in T&T could be replicated in Barbados and Jamaica, where TCL has major operational subsidiaries, and, therefore, TCL is a regional problem; Thirdly, if TCL is placed in a situation where it is forced to stop production, that may signal the end of cement production in the region and place the Caribbean in the unhappy position of having to depend on imported cement; And lastly, if local several banks are forced to petition the court to have TCL declared bankrupt, those banks would be forced to write-down TCL's debts, which total close to $2 billion, and that in turn would have negative consequences for the profitability of the local banking sector.
A TCL bankruptcy, then, would be a very painful and messy exercise with the potential for collateral damage throughout the economy of T&T that would be difficult to contemplate or predict. In the context of the very dire financial situation that TCL finds itself in today, it is extremely troubling, that both the trade union that represents TCL workers, the Oilfields Workers Trade Union, and the management of the company, seem intent on playing a suicidal game of bankruptcy chicken as the company is pushed closer and closer to the edge of destruction.
It is even more troubling that Minister of Labour Errol McLeod has, so far, not appreciated the desperately dangerous situation in which the continuing strike at TCL places the country and the region, and has failed to use his powers to require the parties to return to the negotiating table.
That TCL was unable to satisfy the listing requirement of the T&T Stock Exchange to publish its 2011 accounts by yesterday makes this entire matter that much more unsettling. It is time, therefore, for an end to the apparent paralysis within the Government, the management and board of TCL and the union, an immediate end to this strike and a return to work at the Claxton Bay company.