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PwC talks settlement
Observer Business Reporter
Wednesday, July 27, 2005
Richard Downer
An attempt by the auditing firm PricewaterhouseCoopers (PwC) to settle out of court, a $120-million fraud case just days ahead of the trial last week, was thwarted by Douglas Chambers, the Thermo Plastics receiver who brought the case against PwC, and one of its senior executives, Richard Downer.
Downer and PwC who were terminated as Thermo Plastics receivers in 2002, may have to answer the charges brought by Chambers who succeeded them as receiver. Chambers claimed in his case against Downer and PwC that they frittered away either by overcharging or reckless management, nearly $120 million of Thermo Plastics' money.
Yesterday, PwC in response to queries by the Business Observer said it did not itself directly initiate the out-of-court talks, and that in any case, those talks were no indication of guilt on its part.
"Preliminary discussions regarding a settlement of this matter were initiated by an 'interested ' third party and not by PwC," said Everton L McDonald, the territory senior partner at PricewaterhouseCoopers. "These discussions were pursued on the basis of our avoiding the excessive legal costs and the distraction to our regular professional work that a lengthy trial would entail, and without any admission of wrong-doing or liability whatsoever."
But last week Chambers was dismissed as receiver for Thermo Plastics, by the Jamaica Redevelopment Foundation (JRF) the company that had appointed him, and which now says it wants to reach an out-of-court settlement with PwC and Downer.
Chambers is challenging the legality of his dismissal, and his lawyer Anthony Levy is expected to argue today in the chambers of the Supreme Court, why his client still represented the second and third-tier creditors of Thermo Plastics, and could still therefore pursue the case against Downer and PwC.
The lawyers representing JRF will argue that Chambers was no longer the receiver, and that the firm alone had the right to make the negotiated deal with Downer and PwC.
Yesterday, Janet Farrow, the executive who replaced Denis Joslyn as JRF's principal debt collector, acknowledged that out-of-court negotiations had been held with PwC, but insisted that those talks had been done with the consent and knowledge of Chambers while he was receiver.
"Our desire will be for the receiver to settle the suit to bring the matter to conclusion," Farrow told the Business Observer.
In trying to piece together these latest developments, the Business Observer learned that on July 11, Jamaica Redevelopment Foundation instructed Chambers to accept PwC's settlement offer - which was substantially below the amount in the suit.
Chambers refused, and was summarily dismissed as the receiver. Three days after, another auditor, Ken Tomlinson was installed as the new receiver, apparently with the mandate to accept the offer from PwC.
In a new twist last week, Chambers in challenging the legal right of JRF to either dismiss him as receiver, or to claim the settlement proceeds, sought the intervention of the Registrar of Companies. The registrar ruled on July 22 that JRF no longer had a right to appoint another receiver, and denied JRF's application to appoint Tomlinson.
But yesterday, Farrow told the Business Observer that "Chambers was terminated and that still stands". His attorneys, she said, would be making representation to the courts possibly as early as today, and would point to errors and misunderstandings that made the Registrar of Companies conclude that the appointment of the new receiver was invalid.
This unusually complex case began when the Jamaica Redevelopment Foundation was created by American businessman Dennis Joslin to manage the portfolio of bad debt that the Beal Bank of Texas bought from Finsac in 2000. Joslin was the Beal Bank's agent in Jamaica.
The Thermo Plastics debt was among the receivables to be managed by JRF, but by the time that debt was purchased, Downer and PwC were already in the company as receivers, having been sent there by the National Investment Bank of Jamaica in 1998.
Downer and another PwC executive John Lee spent about four years at the now defunct plastic products manufacturer, eventually disposing of the assets for some $205 million. The receivership cost amounted to $116 million.
In August 2002, Joslin through JRF, having collected nearly $50 million of the debt owed by Thermo Plastics from the sale of its assets, filed what is known as a 'memorandum of complete satisfaction'. This indicated that the debt had been paid to its full satisfaction, placing JRF in a position to discharge its interest in Thermo Plastics.
It is this memorandum that Farrow says was mistaken, and would be challenged in court, and pointed out to the Registrar of Companies.
Legal experts explain that as the receiver, Chambers, having paid out JRF as the secured creditor, now had an obligation to secure as much resources from Thermo Plastics as possible to pay the second-tier creditors. This is assuming that the court rules that the memorandum of complete satisfaction was valid.
Yesterday Farrow insisted that the lien was not discharged in full - that some had been discharged, while others were not.
The implication is that JRF still maintains both a legal and practical interest in Thermo Plastics and therefore, claims on any additional inflow of including any potential proceeds from a legal settlement.
Farrow dismissed an argument mounted by Chambers that with the discharge of the lien he no longer represented JRF, but the other second-and third-tier beneficiaries. She claimed that up to two weeks ago, Chambers had made representation to JRF for the payment of some of the costs involved in the receivership - demonstrating, she said, a recognition that he still represented the JRF.
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Observer Business Reporter
Wednesday, July 27, 2005
Richard Downer
An attempt by the auditing firm PricewaterhouseCoopers (PwC) to settle out of court, a $120-million fraud case just days ahead of the trial last week, was thwarted by Douglas Chambers, the Thermo Plastics receiver who brought the case against PwC, and one of its senior executives, Richard Downer.
Downer and PwC who were terminated as Thermo Plastics receivers in 2002, may have to answer the charges brought by Chambers who succeeded them as receiver. Chambers claimed in his case against Downer and PwC that they frittered away either by overcharging or reckless management, nearly $120 million of Thermo Plastics' money.
Yesterday, PwC in response to queries by the Business Observer said it did not itself directly initiate the out-of-court talks, and that in any case, those talks were no indication of guilt on its part.
"Preliminary discussions regarding a settlement of this matter were initiated by an 'interested ' third party and not by PwC," said Everton L McDonald, the territory senior partner at PricewaterhouseCoopers. "These discussions were pursued on the basis of our avoiding the excessive legal costs and the distraction to our regular professional work that a lengthy trial would entail, and without any admission of wrong-doing or liability whatsoever."
But last week Chambers was dismissed as receiver for Thermo Plastics, by the Jamaica Redevelopment Foundation (JRF) the company that had appointed him, and which now says it wants to reach an out-of-court settlement with PwC and Downer.
Chambers is challenging the legality of his dismissal, and his lawyer Anthony Levy is expected to argue today in the chambers of the Supreme Court, why his client still represented the second and third-tier creditors of Thermo Plastics, and could still therefore pursue the case against Downer and PwC.
The lawyers representing JRF will argue that Chambers was no longer the receiver, and that the firm alone had the right to make the negotiated deal with Downer and PwC.
Yesterday, Janet Farrow, the executive who replaced Denis Joslyn as JRF's principal debt collector, acknowledged that out-of-court negotiations had been held with PwC, but insisted that those talks had been done with the consent and knowledge of Chambers while he was receiver.
"Our desire will be for the receiver to settle the suit to bring the matter to conclusion," Farrow told the Business Observer.
In trying to piece together these latest developments, the Business Observer learned that on July 11, Jamaica Redevelopment Foundation instructed Chambers to accept PwC's settlement offer - which was substantially below the amount in the suit.
Chambers refused, and was summarily dismissed as the receiver. Three days after, another auditor, Ken Tomlinson was installed as the new receiver, apparently with the mandate to accept the offer from PwC.
In a new twist last week, Chambers in challenging the legal right of JRF to either dismiss him as receiver, or to claim the settlement proceeds, sought the intervention of the Registrar of Companies. The registrar ruled on July 22 that JRF no longer had a right to appoint another receiver, and denied JRF's application to appoint Tomlinson.
But yesterday, Farrow told the Business Observer that "Chambers was terminated and that still stands". His attorneys, she said, would be making representation to the courts possibly as early as today, and would point to errors and misunderstandings that made the Registrar of Companies conclude that the appointment of the new receiver was invalid.
This unusually complex case began when the Jamaica Redevelopment Foundation was created by American businessman Dennis Joslin to manage the portfolio of bad debt that the Beal Bank of Texas bought from Finsac in 2000. Joslin was the Beal Bank's agent in Jamaica.
The Thermo Plastics debt was among the receivables to be managed by JRF, but by the time that debt was purchased, Downer and PwC were already in the company as receivers, having been sent there by the National Investment Bank of Jamaica in 1998.
Downer and another PwC executive John Lee spent about four years at the now defunct plastic products manufacturer, eventually disposing of the assets for some $205 million. The receivership cost amounted to $116 million.
In August 2002, Joslin through JRF, having collected nearly $50 million of the debt owed by Thermo Plastics from the sale of its assets, filed what is known as a 'memorandum of complete satisfaction'. This indicated that the debt had been paid to its full satisfaction, placing JRF in a position to discharge its interest in Thermo Plastics.
It is this memorandum that Farrow says was mistaken, and would be challenged in court, and pointed out to the Registrar of Companies.
Legal experts explain that as the receiver, Chambers, having paid out JRF as the secured creditor, now had an obligation to secure as much resources from Thermo Plastics as possible to pay the second-tier creditors. This is assuming that the court rules that the memorandum of complete satisfaction was valid.
Yesterday Farrow insisted that the lien was not discharged in full - that some had been discharged, while others were not.
The implication is that JRF still maintains both a legal and practical interest in Thermo Plastics and therefore, claims on any additional inflow of including any potential proceeds from a legal settlement.
Farrow dismissed an argument mounted by Chambers that with the discharge of the lien he no longer represented JRF, but the other second-and third-tier beneficiaries. She claimed that up to two weeks ago, Chambers had made representation to JRF for the payment of some of the costs involved in the receivership - demonstrating, she said, a recognition that he still represented the JRF.
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