Yaneek Page | What to do if the pandemic is forcing you into bankruptcy

QUESTION: I had to close my small variety store and lunch shop because of COVID-19 and slow business since the school closure and lockdowns. The bulk of my customers were schoolchildren and teachers and so on. Right now, I am in a serious state with depression and crisis because I owe so much money and cannot pay. I owe over $450,000 on my credit card, $980,000 on a small business loan I took out two years now, and about $600,000 to a furniture and appliance store.

I am someone who always pays my bills on time with no issues, but since COVID-19, my business has been messed up and my life turned upside down. I have explained all of this to these people, and yet still, they do not care and are saying I must pay it. I tried to negotiate but got nowhere. My sister who is in New York recommend I file for Chapter 11 bankruptcy protection to stop this harassment and give me space to build back my life, but I don’t know if that is possible in Jamaica. Can you help me, please?

– Sue, St Catherine

BUSINESSWISE: I’m very sorry you are going through this severe financial hardship brought on by the economic fallout from the current pandemic. I sincerely hope the information provided in this column will help to advance your efforts to rebuild your business and achieve personal financial recovery as soon as possible.

Under Jamaican law, a person may be considered insolvent where he or she owes $300,000 or more to creditors and is unable to pay. An insolvent could be a person living in, owning property in, and having a business in Jamaica. Based on the details you provided, you may be eligible to seek assistance under Jamaica’s insolvency laws.

The touted benefits of legal insolvency are the potential avoidance of legal action, a possible cap on interests and penalties accrued, and coming to a binding agreement with your creditors to repay part or all outstanding debt without harassment and winding up business operations. This, in effect, may give you the space, time, and conditions you need to salvage the business and rebuild.

While Jamaica does not have ‘Chapter 11’ bankruptcy’ as in the United States, we do have an Office of the Supervisor of Insolvency, OSI, which deals with bankruptcy or insolvency. Its mission is defined on the website of the Ministry of Industry, Commerce, Agriculture and Fisheries, recently renamed the Ministry of Industry, Investment and Commerce, MIIC, as, “To regulate the insolvency regime of Jamaica, ensuring it is in keeping with international best practices, thereby bolstering the economy and strengthening investors’ confidence in the commercial sector of Jamaica.”

The OSI is located in New Kingston. You may reach them by mail at 52-60 Grenada Crescent, CSO Box 497, Kingston 5; by email at info.osi@micaf.gov.jm; or by phone at 876-929-8332 or 876-619-1475/6. In conducting research for this column, I was able to contact them both via telephone and email and found the officers both helpful and very responsive in a timely manner.

The OSI was launched in 2015 to execute the relatively new Insolvency Act of 2014, a document that is almost 200 pages long, comprising 15 parts and covering a total of 311 areas related to insolvency, from ‘Interpretation and Application of the Act’ and ‘Contracts in Consideration of Marriage’ to ‘Where Person May be Ordered by the Court to Pay Trustee’.

As bankruptcy is a profoundly serious matter which has considerable personal and business implications, I strongly suggest that you do the following first:

• Read the Insolvency Act, which can be found on the website of the Ministry of Justice.

• Read up on bankruptcy via the website of the Ministry of Justice and the Office of the Supervisor of Insolvency via www.micaf.gov.jm.

• Make an appointment for independent financial and credit counselling with a licensed accounting professional with experience and expertise in insolvency.

• Make an appointment to consult with a lawyer who specialises in insolvency.

Business reorganisation plan

Applications for insolvency are not automatic. There is the issue of eligibility. You will need to submit a formal application and a proposal for business reorganisation and repaying creditors, which must be agreed by the committee of creditors, among several other steps.

As the current webpage for the OSI lacks details on the process surrounding applications from prospective members of the public who may be insolvent, costs, and timelines for the processing of applications, I reached out to them for answers on your behalf. Below is the response I received:

Thank you for contacting this office for information. We are pleased to advise that a new and improved website with our information will soon be available to the public even as we work to obtain and maintain our own. Particulars requested are provided below:

Only insolvents may access the regime, and insolvents may only access the regime through a trustee. Applicants to the Office of the Supervisor of Insolvency fall into two categories:

a. Those insolvents who had already located a licensed trustee who consented to act and who makes the application to the OSI on behalf of the insolvent. In this instance, the supervisor is only required to review the application for accuracy and issue a Certificate of Assignment. This is done within three working days. No cost is involved.

b. Those insolvents who are unable to locate a licensed trustee willing to act. They attend on the Office of the Supervisor of Insolvency. To ensure the applicant is an insolvent, there are intake forms to be completed and submitted to the OSI, along with documentary evidence to substantiate the information provided. At all times, processing does not commence until all forms are submitted duly completed. Upon submission, investigations are then conducted to verify the details reported. Process time is three weeks from the date of submission. The insolvent is then advised of their status and whether the matter would be referred to a trustee, including the government trustee, for the trustee to make the relevant application. No cost is involved.

Please take note that these processing times are not the administration of the proposal/organisation or the bankruptcy estate. Trustees carry out those functions.

I know that this is a physically, emotionally, and financially distressing time, but please do not give up. Remember that failure is not final and that many remarkably successful individuals and companies have been able to overcome insolvency and tough times to emerge even stronger than before. I hope this information was helpful, and I wish you all the best.

One love!

n Yaneek Page is the programme lead for Market Entry USA, a certified trainer in entrepreneurship, and creator and executive producer of ‘The Innovators’ and ‘Let’s Make Peace TV’ series. yaneek.page@gmail.com