#1OFFICE OF THE SUPERVISOR OF INSOLVENCY (OSI) MINISTRY OF FINANCE A New Era in Insolvency in Trinidad and Tobago Presented by: Mrs. Karen Seebaran-Blondet, supervisor of insolvency Mr. Sunil Moonsammy - Licensed Trustee, Accountant at RS Baboolal and Company, and Mr. Suresh Dan - Deputy Supervisor of Insolvency Website: www.Finance.Gov.tt/divisions/office-of-the- supervisor-of-insolvency/ OSI email: [email protected] July 18th 2023#2Role of the OSI Overview Benefits of the Proposal Protection of Societal Interests Who Are Our Clients Insolvency Process Individual Insolvencies Characteristics of the BIA Stay of Proceedings Who is an Insolvent Person Early Detection Sign of Insolvency Receivership Process Powers of the Supervisor under the BIA Contact Information#3INTRODUCTION What is an insolvency system? It allows for keeping viable businesses operating, increases access to credit, improves creditor recovery and there is the strengthening of job preservation are a few of the main goals of an insolvency system • • Why should having a robust insolvency system matter? ✓ From the viewpoint of the debtor (individual and corporate) ✓ Benefits to the financial system (organized, predictable, transparent, and support to the economy) ✓ Benefits to the country (impacts GDP, Ease of Doing Business and aids international competiveness and acts as a stimulus for investment In the age of globalization, it provides a framework for cross-border insolvencies Lessons from other countries - Canada, Jamaica, Barbados and Scotland#4The ROLE OF THE SOI OSI was established to operationalize the BIA, the focus being on improving the credit, and by extension, the financial and economic environment of Trinidad and Tobago. • The Supervisor is responsible for the administration of the BIA and is charged with the role of Regulator. The role of the Supervisor as the Regulator of the Trustees ensures their compliance with the BIA and preserves the integrity of the regime.#5• WHO ARE OUR CLIENTS? The OSI's principal clients are: ◆ Debtors; ❖ Creditors (secured and unsecured); ✰ Individuals; ◆ Societies or Organisations; ◆ Corporations; and * Licensed Trustees who may be appointed as Receivers. STOCK#6CHARACTERISTICS OF THE BIA • As a regulatory body, the OSI administrates the BIA which envisages: ❖ Accomplishing - an efficient, fair and equitable reorganization where an economically viable business enterprise can be saved; Accomplishing an orderly, fair and efficient liquidation of business enterprise when it cannot be saved; ❖ Accomplishing an equitable distribution of proceeds to creditors, respecting type and rank of the claim in accordance to clear rules for doing so; ◆ Providing a method to recycle assets and labor back to productive use within an economy;#7CHARACTERISTICS OF THE BIA CONT'D ◆ Providing clear and predictable procedures, deadlines and outcomes; Providing appropriate incentives for timely movement toward case resolution; ◆ Providing an equitable allocation of risk; ◆ Providing protection of creditors rights; and ❖Serving as a backdrop for negotiation and out of court resolution of disputes.#8WHO IS AN INSOLVENT PERSON? An insolvent person is someone whose total debt (bank/credit union loans, hire purchase agreements, etc.) is four thousand dollars ($4,000.00) or more. The person must be unable to pay his/her debts or has stopped paying his/her debts when they become due or whose total assets (cash, property, jewellery, car etc.) is not sufficient to pay his/her debts on the due date.#9EARLY DETECTION SIGNS OF INSOLVENCY Inability to meet your immediate and short term financial obligations; Change in the business environment- COVID 19; Supply Chains; Climate Change Continued Losses; Cap/reduced credit limit from lenders; Use of personal funds; Selling of private assets - e.g. Cars, land; and Net current assets are less that your current liabilities.#10STAY OF PROCEEDINGS Section 55 - Notice of Intention to make a Proposal (AUTOMATIC STAY) Once a notice of intention is filed with the OSI, this prevents creditors from seeking full recovery until the trustee has been discharged or the insolvent person becomes bankrupt. Section 56 - Upon Bankruptcy Similar to Section 55, prevents creditors from enforcing claims on the bankruptcy of the debtor until the trustee has been discharged. Section 57 - Application to the Court for the removal of stay A creditor who's affected by the operations of Section 55 or 56, may apply to the court for the removal of the stay.#11THE INSOLVENCY PROCESS The Insolvent Person Communicates with OSI And a Trustee is selected from OSI list of Trustees Trustee submits Notice of Intention to the OSI after consulting with Debtor Stay of proceedings commences - creditors unable to make claims against the insolvent person Trustee makes the relevant submissions to OSI for Review - Cash Flow Statement and Report and inform the Creditors Creditors Meeting Resolution: Proposal Accepted/ Amended by Creditors Trustee provides a copy of the Proposal to ALL Creditors Trustee together with Insolvent Person prepares a Proposal and submits to OSI for review for reasonableness and achievability | L Court Hearing Application and documentation to aprove Proposal The Proposal is executed by the Trustee Proposal NOT accepted the insolvent person "pushed" into Involuntary Bankruptcy The Insolvent Person is Discharged after the terms and conditions of the Proposal are completed#12Benefits of the Proposal • The insolvent person gains access to a Trustee (professionals in the industry) who provides advice on formulating a new business plan and rescheduling repayments to creditors; • A proposal is a proactive measure by an insolvent person which provides "breathing room” during a period of financial difficulty; • The process is Court driven where disputes are referred for resolution in accordance with the BIA; Certainty of outcome - solvency • Efficient processes (strict timelines that are enforced by both the OSI and the Court); • Promotes rehabilitation of individuals and companies as opposed to liquidation of the insolvent person; and BENEFITS • Maintains the going concern of the business, preservation of jobs and goodwill.#13PROTECTION OF SOCIETAL INTERESTS The debtor is part of a system and has an impact on demand and supply. *A high percentage of new businesses fail even in the best of economies in the best of times. 66 ❖An efficient insolvency system encourages taking chances on well thought of responsible risks" and this will not happen if the most creative entrepreneurs are stalled in endless procedural and punitive proceedings. Having an efficient insolvency system in place can positively impact entrepreneurial activity, economic stability, growth and the country's competitiveness as it encourages foreign direct investment.#1430 25 20 20 15 10 5 No of Inquiries for Individual Insolvencies 0 2017 2018 2019 2020 2021 2022 2023#15THE RECEIVERSHIP PROCESS Receiver/Receiver- Manager Appointed by the Court/Secured Creditor Notice of Appointment of Receiver published in Daily Newspaper Fee payable by Receiver $250.00 Registered with the OSI Trustee takes control/possession of Property Notice of Intention to Enforce a Security Notice and Statement of the Receiver (Reviewed by the OSI) Trustee manages the Property Realized/Sales Trustee's Final Report OSI Reviews Final Report: for compliance and completeness with BIA, Trustee is informed that the case is concluded Trustee reports to the OSI O the Case by filing certain Report/s semi-annually Creditors paid by the Trustee in order of priority#16Supervision of estate management and related matters POWERS OF THE SUPERVISOR UNDER THE BIA Trustee Licensing and monitoring Compliance with the BIA ✓ ✓ Conduct investigations Maintenance of Public Records Preservation of the Integrity of the Insolvency System#17Making our mark •Member of the IAIR • Member of INSOL International • 13 Licensed Trustees ⚫30 Receiverships • 5 Insolvents • Networking • Technical and Advisory support Challenging, but • Effective Building a Strong, knowledgeable resource base • Ensure support of • stakeholders • Incremental changes Where Are . We Now? FRESH PERSPECTIVE Improved Framework • Amendments to the Regulations of • • . the BIA. A more modern insolvency system in line with best practices. international • Improved regulation of Trustees • Improved creditor/ debtor relationships Maximizing the value of companies' assets • Increasing the possibility of preserving jobs and supply chains. • a better business climate and support for SMEs Recalibrating • Outreach programmes e-brochure Building OSI capacity Maintenance of Public Records • Trustee's Reporting and Meeting Harmonization of Legislation • Part XI - International Insolvencies Individual and Corporate rescue mechanisms CONTINUOUS IMPROVEMENT OPERATIONAL EXCELLENCE MOVING FORWARD#18TAKE AWAY - POINTS • Who is an insolvent person – A company that is unable to repay your immediate debts Red flags - EARLY Detection is key to rehabilitation What to do? Understand the Insolvency process and benefits. • What is a Proposal - Arrangement to repay your creditors at a future date, accepted by the Creditors and approved by the Court. • • Time Bound - Strict timelines – not to prejudice the right's of the Creditors and protection to the insolvent person Don't wait until your financial situation becomes a crisis to make a decision – seek assistance.#19"What remains constant is that there will be individuals and businesses who, for various reasons find themselves overwhelmed by debt. For them, and for the benefit of the economy, an effective insolvency regime is necessary to ensure an efficient process to settle debts and, where appropriate, provide individuals with a fresh start and businesses with an opportunity for financial rehabilitation". Minister James Moore - Canada#20CONTACT INFORMATION The Office of the Supervisor of Insolvency (OSI) Ministry of Finance Level 19, Finance Building Eric Williams Financial Complex Independence Square Port-of-Spain [email protected] (868) 612-9700 exts. 1945-8 www.finance.gov.tt/divisions/office-of-the-supervisor-of- insolvency E-brochure is available on our webpage @#21ober Ado Hobe Stock Ado Stock Stock dobe THANK YOU! Adobe Stock Stack obe Sto Stock Ado Stock be Sto Adobe estock