Cake Shop given time to pay arrears to employees
A Supreme Court judge has granted a struggling bakery business time to pay a series of debts owed to five former employees.
Puisne Judge Larry Mussenden on Friday heard a submission by lawyer Marc Daniels, representing Cake Shop Limited, that his client be given time to pay $58,114.93 that is owed to former staff members Chittababu Narayanasamy, Janaarthanan Jawar, Udayakumar Santhananam, Mahipal Singh and Prinol Dias.
The amount owing is in respect of unpaid overtime, unauthorised deductions of wages, outstanding wages, and constructive unfair dismissal.
Four of the five former employees filed a petition to wind up the company under section 162 of the Companies Act on the basis that the company is unable to pay its debts as and when they fall due.
Mr Dias is not a petitioner, but supports the making of a winding-up order, said David Kessaram of Cox Hallett Wilkinson, who represents the men.
Mr Kessaram told the winding up hearing that an employment tribunal ruled last Wednesday that the money was owed to his clients, ordering that payments be made to them by last Friday.
He said the company had conceded all claims.
Mr Kessaram added that no creditors have opposed the winding-up petition.
Mr Daniels said $5,899.53 was paid on Thursday and Cake Shop Limited proposed making additional payments on January 21, January 30, February 15 and February 28 in order to satisfy the debts.
He said Cake Shop reopened in December, and owner Shawn Thomas was taking steps to raise additional funding for the business.
Mr Daniels added that the owner has made payments to his former employees out of his own pocket.
The lawyer said that his client required “a reasonable time” during which to settle the debts.
Mr Daniels said: “He is operating with faith and working with various partners to resume trading.”
He added that his client has a significant asset, a building with fixtures and fittings, which is available to satisfy debts.
Mr Kessaram, for the petitioners, said there had been “a complete breakdown of trust and confidence in this company. Its promises have proved to be unreliable in the past, and they are reluctant to acquiesce in further promises from the same company in the circumstances”.
Mr Kessaram said his clients stopped working for the company last August because they were not being paid.
Before that, Mr Kessaram said, the company stopped issuing pay statements, and some deductions from wages for social insurance and health insurance were not being paid to government.
The lawyer added that he understood that the company owed more than $240,000 to the social insurance department for unpaid social insurance.
Mr Kessaram said one of the petitioners had paid for medical treatment because health insurance premiums had not been deducted and paid on time to the health insurance provider.
He said: “Only at the 11th hour, when the company’s back was against the wall and it couldn’t refuse to accept the claims were valid, it conceded them.”
Mr Kessaram added: “This is not the petitioners being whimsical about promises. They have serious doubts that these promises will be kept.”
He said he understood that the Bermuda Economic Development Corporation is where the company intends to go for funding.
Mr Kessaram submitted that his clients would “feel more comfortable knowing the affairs of the company were in the hands of a liquidator”.
Mr Justice Mussenden ruled that the company “should be given an opportunity to execute the payment plan”.
He said he had taken into consideration that the company was an ongoing business with revenue being generated, the payment plan that is “reasonable in all the circumstances”, and the views of the petitioners who have “lost trust in the company and seek payment”.
Mr Justice Mussenden said a return date of February 18 would allow time for the three payments on January 21 and 30, and February 15, to be paid.
On the hearing of the petition on February 18, the judge said, the company is to produce an affidavit regarding payments made, payments still to be made, and “for the way forward for the company”.
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