No second payout for former Wyndham workers but pension matter settled
Published:Tuesday | June 2, 2015 | 11:32 AM
The sale of the hotel property in New Kingston, known otherwise as '77 Knutsford Boulevard', did not provide enough funds to cover additional redundancy payments to former hotel workers, but a deal has been reached on their pension payouts, said a union representative on Tuesday.
The hotel, which operated under the Wyndham flag prior to its takeover by banker RBC Royal Bank and before that under Hilton's marquee, was sold last year to Kevin Hendrickson for US$17.6 million.
RBC took over the hotel from owner Ocean Chimo in 2011, allegedly for unpaid debts, and placed it in receivership. Around 300 workers lost their jobs after a fire shuttered the hotel in 2013.
The proceeds of the sale were enough to repay the banks, and meet other expenses, but could not cover termination pay for workers. Bustamante Industrial Trade Union representative Ruddy Thomas said this was not unexpected.
"The receivers in place, on behalf of RBC, arranged for the sale of Wyndham. Before it was sold, we anticipated there would be difficulties in getting a sale price near to the market price," he said.
Under mediation by the Ministry of Labour, the union and receiver appointed by RBC had agreed that workers would get an advance payment and that the rest would be paid out of surplus funds.
But: "Per our legislation, worker entitlements are with workers placed fourth down the line, behind the banks, the receiver and the Government. We were advised that there was no surplus - this was supported also by documentation received," said Thomas.
"With this understanding, the matter has been settled."
According to court documents, Ocean Chimo borrowed more than US$30 million between 2005 and 2008 from RBTT Bank Jamaica Limited and RBTT Bank Limited - later rebranded RBC under Canadian ownership. RBC held mortgages over the hotel property as well as a debenture over its fixed assets.
Documentation seen by Wednesday Business indicates that the receiver paid out $5.16 billion - cobbled together from insurance proceeds, rental income and proceeds of the final sale.
sale proceeds payments
RBC was paid US$15.89 million ($1.97 billion) on the loan. The bank previously received J$493.86 million from insurance proceeds, which were paid out by the receiver against the loan.
From the documents reviewed, payments made from the sale proceeds included: $120.4 million for transfer costs; $11.48 million for the auctioneer's fee; $40.39 million for realtor's commission; $2.35 million for stamp duty; $14.78 million paid to attorneys for the transfer; $2.44 million for GCT charges on the attorney's fees; $95,849 as payment to the attorneys for preparing the sale agreement and letters of possession; and $15,458 for cash spent on telephone calls, photocopies, postage.
Otherwise, professional fees of J$5.469 million were paid out from other receipts. The receiver's fee was not cited on the documents.
Other documents asserted that the bank had not recovered the 33 per cent advance made to workers before the sale.
Meantime, the Financial Services Commission said Monday that matters relating to the winding up of the Ocean Chimo/Hilton Kingston pension fund have been resolved.
Prior to that, the FSC had issued a notice saying that "in respect of the winding-up application received from the trustees of the Ocean Chimo t/a Hilton Kingston pension fund, which has proven to be a complex issue, the FSC has made considerable progress in its review process."
While the FSC did not provide further details on Monday, Thomas said that workers had reported receiving their payments.
"Persons were separated and the pension plan wound up," said the union rep. "The process takes up to 90 days ... . What we did was to impress on pension managers the need to proceed as quickly as possible. I have spoken to several persons who said that they have received payments. It is our understanding that the matter has been resolved."
The pension plan had 200 workers on the membership roll.
Sagicor Group Jamaica, which acquired RBC last year and whose subsidiary, Sagicor Life Jamaica, through its pension arm, administered the Ocean Chimo pension plan, had not commented on the final settlement up to press time.