Receiver report tracks transfer of Arc Systems assets to Arc Properties
INTERIM RECEIVER Ken Tomlinson has reaffirmed in a second report to the court that properties owned by Arc Systems Limited were transferred over time to a company called Hilda Corporation and subsequently transferred two years ago to another company called Arc Properties Limited.
HILDA CORPORATION appears to no longer exist, the receiver alleges, based on a check of records in St Lucia where the company was registered.
Tomlinson was appointed to wind up Arc Systems in May over commercial debt of $25.8 million reportedly owed for a consignment of construction steel or rebars from Exclusive Holidays of Elegance Limited, a transport company headed by Montego Bay businessman Fred Smith.
Norman Horne is a shareholder of both Arc Systems and Arc Properties, based on formal documents. Both Hilda and Arc Properties have guaranteed loans for another of Horne’s companies, Arc Manufacturing, according to Tomlinson’s report.
The receiver, who was ordered by Justice David Batts to track down any assets and associated companies of Arc Systems, has asked the company for all records and documents related to the period 2008-2018.However, Arc Systems’ attorneys have said no records exist, since the company has not been trading since 2009, an assertion that Tomlinson has challenged in his report, citing transactions with National Commercial Bank Jamaica beyond that period.
Arc’s attorneys, Archer Cummings & Company, to whom Tomlinson wrote on June 4 requesting “a listing of all companies in the Arc Group”, have advised the receiver that notwithstanding media reports, there is no entity called Arc Group, and that Arc Systems itself has no associate companies.
Arc’s lawyers have also stated
that the court order requires production of records only for 2014 and beyond, another assertion that Tomlinson’s lawyers have dismissed as an incorrect reading of the court order in a letter to Archer Cummings that gave Arc Systems a deadline of July 10 to comply.
Asked whether he had received the documents on Wednesday, the interim receiver told the
Financial Gleaner he was not prepared to discuss any aspect of the case.
However, reliable sources indicate that records covering 20142018 have been produced.
Properties transferred between 2009 and 2012
Tomlinson reported to the court that Hilda Corporation started to take control of the assets of Arc Systems from 2009, based on his tracking of activity around the company.
“Various data reviewed at the National Lands Agency indicated that 24 properties previously belonging to Arc Systems Limited were transferred to Hilda Corporation Limited between June 2009 and January 2012,” the report said.
The properties were later transferred from Hilda to Arc Properties under a Reconstruction and Merger Agreement, or RMA, dated June 14, 2017, according to the report. Tomlinson, in his first report to the court in June, also referenced loans secured by Arc Systems Limited from NCB between April 2011 and December 2011, while alleging that mortgages covering the loans were transferred from Arc Systems to Hilda Corporation with the consent of NCB. In the July 24 court hearing, Tomlinson acknowledged under questioning from Arc’s lawyer that the mortgages on properties transferred from Arc Systems were the responsibility of the transferees.
Companies Office records show that Arc Systems has two directors - Lackie Horne, who is brother to Norman Horne; and Sholton Brown, who testified in court that he was the personal assistant to Norman Horne. The primary shareholders are listed as Norman Horne with 48.8 million shares, brother Lackie Horne with 3.05 million shares, and sister Charlotte Alexander with 9.15 million shares. Another
13 minority shareholders each hold shares ranging from 41,829 to 52,286 units.
Tomlinson reported that according to the RMA, Hilda Corporation was to cease to exist on or before December 31, 2017, and that his checks of records in St Lucia indicated that Hilda was no longer registered there as an international business company.
All the properties previously transferred from Arc Systems to Hilda Corporation, according to Tomlinson, are now held by Arc Properties. He also reports that Norman Horne and Charlotte Ann Hayles are the only two directors and shareholders recorded for Arc Properties Limited since its incorporation on January 18, 2017.
Tomlinson’s report also notes that documents have placed Arc Systems, Arc Properties and Arc Manufacturing at the same address – 14 Bell Road in Kingston. However, Brown, in testimony to the court on July 24, said that Arc System’s address was 7 Ashenheim Road.
The receiver also referenced a company called Arc Systems Panama, about which he has requested explanation from Arc System’s lawyers as to whether it has any connections to Arc Systems Limited and what has become of it.
The hearings into the winding-up order against Arc Systems resume in the Supreme Court on September 19, when Batts expects to hear closing arguments in the case. Tomlinson’s second report was filed with the court ahead of the July 24 hearing.