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Bankruptcy protection is so relevant

Sunday, May 20, 2018

When I proposed Trinidad’s Bankruptcy Proceedings legislation to the Government in 2006 following the embarrassing seizure of BWIA’s aircraft in Miami due to non-payment to its lessors and it became law following swift passage in Parliament, I really expected the term “Bankruptcy Proceedings” would be promulgated to our business and private consumers via an education system allowing them to fully grasp its prodigious benefits should their circumstances ever desire it.

I also expected attorneys would have educated themselves and market this necessary service to protect clients from Trinidad’s one size fit all triple “A”-only expectations from our inherently parochial bankers and other financial facilitators who would malevolently destroy a borrower no longer favourable to their balance sheet.

Although the word “bankruptcy” may sound unpleasant to Trinidad’s archaically closed-minded society, it can be much like scriptural revelation in that it is both powerful and compassionate towards honest businesses and private consumers experiencing temporary financial challenges.

A bankruptcy proceeding would not disregard a business or private individual unable to maintain timely payments, nor negate debts bereft of honouring them. It, however, protects them from the paradigm of Trinidad’s illiberal and vindictive lenders, provide them breathing space through consolidation while protecting their assets and life’s work from stealth, malice, and of being grabbed and sold at auction, many times through inside leaks to trusted friends and distant families.

Say you have assets worth $5M and owe your lender $2M they sued you for, they would obtain judgment against you hastily selling your entire portfolio for under $1 M. If it’s a company, they would sue all the directors for shortfalls spitefully refiling continual judgments so the individuals would never recover via obtaining funding elsewhere, unless of course you are a well-connected politician and a consortium of bankers can writes off and forgive your $30M loan on a “failed” South mall, re-establishing all privileges.

Bankruptcy procedures are not slam-dunk favourable to any one side. If you are an honest borrower you will be protected from the sole objectives of sharks by petitioning a special bankruptcy court wherein the bankruptcy judge would appoint a trustee who acts as an impartial referee between lender and borrower, overseeing the entire proceedings, examining the petitioner’s assets and lender’s claim to determine viability, avoiding system abuse.

All types of people have gotten into financial difficulties since the invention of money and at the pinnacle of your success many unscrupulous banking employees would push “attractive” loans and credit cards on you just to meet their quotas, but bankruptcy protection is beneficial to good business practices and available in all enlightened countries. All levels of corporate and individual consumers have sought its protection including very successful fortune 500 companies, Macy’s, Airlines, Ford Motors, Sears, Payless Shoes, Radio Shack, etc, and personal albeit successful individuals like Donald Trump, Movie Stars, Oscar Wilde, Walt Disney, and other famous celebrities, all of whom, had they been denied protection from hasty and cruel annihilation, would not be around today providing goods and services, employing people, paying taxes, and being good corporate citizens, many even doing philanthropic deeds.

There are variations of bankruptcy protection, some referred to as “Creditor in Control” which would return the business to the owners who, once nurtured back to good financial health, can rebuild their credit worthiness and not be mendicants starving at the buffet table. Bankruptcy is not the end of one’s financial world but a new start which can save families and corporations by allowing them to access certain assets while sorting themselves, and they need not be embarrassed about being responsible since seeking workable solutions for survival is the goal transforming honest citizens with genuine financial challenges from their burden of debt to productive members of society.

If Trinidad is really serious about becoming the financial capital of the Caribbean it must urgently change its accepted narrow-minded and destructive banking culture by creating real competition for economic growth via granting licences to matured and creative global banks. Trinidad’s lenders are so limited through their grossly over-esteemed “fit and proper” infallibility that they have no conception about sub-prime lending in which honest citizens cleared from bankruptcy can still be creative business geniuses advancing from their errors as against being permanently destroyed.

• Trevor Hosten is an entrepreneur and consumer's advocate, and founder of Public Interest Research Group (PIRG) which petitioned Government for and obtained Trinidad's Banking Ombudsman (now the Financial Services Ombudsman) and the Bankruptcy & Insolvency ACT of 2006."

Trevor Hosten


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