Republic Bank breach of contract trial Company informed of appointment of receiver at meeting to settle debt- Bulkan

Apr 19, 2018 News

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Ronald Bulkan returned to the witness stand to continue his evidence in the matter for which, Republic Bank (Guyana) has been sued over an alleged breach of contract.
The trial continued on Tuesday before Justice Navindra Singh at the Georgetown High Court.
Local company, Precision Woodworking Limited had accused Republic Bank (Guyana) Limited of unlawfully appointing a receiver to seize its assets even after the company reached an agreement with the bank to repay a non-performing loan.
The Woodworking Company had secured certain loans via Republic Bank but subsequently fell in arrears in the loan servicing.
Republic Bank, as part of the process of recovering the loan, appointed a receiver to seize assets of Precision by way of notice of a Court Order in 2011.
The company headed by Ronald Bulkan, who is Minister of Communities, and his brother Rustum, moved to the court in 2012, challenging the legality of the receiver.
In his evidence before the Court yesterday, Bulkan disclosed that the company had already made arrangements to start repaying the loan when he learnt of the appointment of Kashir Khan as receiver.
Detailing the sequence of events, Bulkan told the court that on June 24, 2011 he had sent an email to Mr. John Alves, Managing Director of the Bank at the time.
According to the witness, the email informed Alves that the company had accepted an offer of US$1.15 M for the sale of a property located at 32 ‘E ‘Half, Ruimveldt Industrial site.
He said he received an acknowledgement of the email from the Director, which was copied to his brother Rustum Bulkan and Sase Jagnandan.
Asked by his attorney, Nigel Hughes whether there was any other response to the email, Bulkan told the court that a meeting was held pursuant to the correspondence on June 24, 2011.
The response was met with objections from attorney, Timothy Jonas, who is representing the second name defendant, (Kashir Khan). Jonas noted that Bulkan was not in a position to say definitely that the meeting was as a result of the email he disseminated on June 24, 2011.
The objection was noted by the Court. Hughes, nonetheless, continued the same line of questioning.
“So what happened after June 24, 2011 in relation to this matter?” the lawyer asked.
Bulkan responded that there were telephone conversations between himself and the Managing Director.
During the conversations, Bulkan revealed that, “a request was made by me to meet with the bank.”
That meeting, witness said, took place on June 30, 2011 at around 7:30 pm at the Republic Bank Guyana’s headquarters, Promenade Court New Market Street Georgetown.
At the meeting, Bulkan recalled that representatives of Precision Woodworking Limited met with the Managing Director (Alves) and three persons whom we were introduced to before the meeting.”
He noted that the fifth person was only introduced to them towards the end of the meeting.
Bulkan detailed that at the meeting, he informed the Bank about development surrounding the sale of the property at Lot 32 ‘E’ half Ruimveldt Industrial Site. He noted that the Bank was informed that there was an agreement of sale pursuant to the offer for the sale of the property.
Bulkan said that a copy of the agreement of sales between Precision and Torginal Paints Inc. was handed over the Bank along with a cheque for $30M, which represents a first payment.
“I then said to Mr. Alves that this would allow for us continue manufacturing given that the cheque represents a considerable amount of the company’s indebtedness to the Bank.”
Bulkan told the Court that he then made a request for the remaining indebtedness to be converted into a term loan. He said that he also made an appeal for the Bank to consider the company for a partial debt forgiveness.
However, Bulkan noted that Alves informed him that he did not have the authority to offer partial debt forgiveness; that only the Board of Directors can do that.
“He said that he can only make recommendations to the Board for such consideration.”
He recalled, too, that as the meeting was ending, he had inquired about his exact indebtedness to the bank and was presented with a statement to that effect.
The witness said that it was only at this point, towards the end of the meeting that he was introduced to the fifth person in the room —- Mr. Kashir Khan.
“We were meeting for the first time. We learnt that he was appointed receiver of Precision Woodworking Limited.
Bulkan told the court that before meeting Khan, he had only known of a process to appoint a receiver but he was never told that one had been identified.
During initial discussions with Khan, the witness said that he was informed that a new agreement of sale will have to be entered with Khan as the vendor, given his appointment as receiver of Precision.
The following day, July 1, 2011, the witness said he and his brother (Rustum) visited the office of Kashir Khan and they continued to discuss the new sales agreement.
He said that it was agreed that the old agreement would be rescinded and new agreement of sale involving Khan would be entered.
“We agreed, too, that the purchasing price and everything will remain the same except for the passage of the transport — following sale.”
Bulkan explained that while the initial agreement would have allowed for three months before the transport is passed —Khan wanted it to be passed in four months.
He said, too, that the receiver claimed he was not mindful of paying the commission of $6.5M to the realtor.

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