Precision was placed into receivership by Republic Bank despite purchase offer

-Ronald Bulkan tells trial

At the trial of Precision Woodworking’s lawsuit against Republic Bank (Guyana) Limited for alleged breach of contract, its Managing Director, Ronald Bulkan said he sent various correspondences informing the bank of the financial difficulties plaguing the company and at least one purchase offer it had been made for some US$1m, yet the bank placed Precision in receivership.

Taking the stand yesterday, Bulkan, who is joint owner of Precision along with his brother Rustum Bulkan, recalled the several loans which his company had taken from the bank.

Owing, however, to what he termed “operational difficulties” experienced by his company in 2010, Precision was subsequently conveyed to the bank which, in a letter dated July 26 of that year spoke of its intention to wind up the company.

Bulkan said that by the end of 2010, Precision’s financial status was “problematic.”

Asked by his attorney Nigel Hughes whether he had been in contact with the bank regarding their loans, Bulkan answered in the affirmative, noting that their contacts were constant.

He said that a meeting was convened on June 17, 2011 to inform the bank of an offer made by Neal and Massy to purchase Precision for some US$1.15M. Bulkan said he had expressed interest in accepting the potential offer.

He said that a potential purchase offer was also made by businessman H Sugrim, owner of an establishment located close to Precision at Lot 35 Industrial Estate, Ruimveldt Georgetown.

The trial will continue on April 17 when Bulkan is expected to conclude his evidence-inchief after which he is likely to be cross examined by counsel on the other side.

Precision’s suit is being heard by Justice Navindra Singh at the High Court in Georgetown.

In its statement of claim, Precision has said that owing to difficulties by which it was overcome, it was invited to and attended a meeting convened by the bank on June 30th, 2011.

Prior to the meeting, it said, it had borrowed from the bank and had repaid principal in full of about $513,000,000 and had paid interest in excess of $327,000,000 and was always considered by the institution as an “excellent customer.”

At the meeting, the company said its indebtedness stood at $406,553,074, representing the principal, and $10,613,224, representing interest.

Precision said that before the meeting, which dealt with an agreement of sale with Torginol Paints Incorporated for lots 21 and 32 of the property in transport No. 490/2008 for the sum of $230,000,000, its directors had informed the bank of their efforts to find a purchaser for part of that property, to which the bank had no objections.

Its statement of claim details that it thereafter accepted $30,000,000 from Torginol Paints as a deposit on the sale, which was then handed over to, and encashed by the bank.

According to Precision, it was only after the said cheque was handed over that Kashir Khan, in his capacity as receiver for Precision, was introduced to its directors by the bank as having been appointed receiver of the company under the existing debentures.

In its statement of claim, Precision advanced as unlawful, among other things, the bank’s appointment of Khan as receiver.

It has also argued that Khan failed to act honestly and in good faith in dealing with its property “in a commercially reasonably manner” and added that its assets were unlawfully disposed of.

It says it has suffered loss and damage as a result of the actions of the defendants.

It has also advanced that the bank breached the provisions of the Financial Institutions Act by attributing interest to the company’s outstanding indebtedness, when it was not permitted to do so.

It is also seeking a declaration that the appointment of Khan as receiver for Precision Woodworking Limited was unlawful, null, void and ultra vires to the Companies Act 1991.

It also seeks a declaration that Khan did not act in its best interest, given his role as agent of its company, nor did he exercise reasonable care in his dealings with its assets.

A declaration is also being sought that Khan has not acted and or conducted himself as the appointed receiver of Precision in accordance with the Companies Act 1991.

The bank is being represented by senior counsel Robin Stoby, while the receiver is represented by attorney Timothy Jonas.