Arc Systems denied stay, to make second attempt at hold on receivership

The Court of Appeal has rejected a request by Arc Systems Limited to put a hold on the receivership granted by the Supreme Court in May, until its challenge of that ruling is heard.

But the company is not ready to give up on that fight.

“Our client maintains that its appeal has merit and is pursuing its application for a stay of execution. Our client will be approaching the full court of the Court of Appeal for its application for the stay of execution to be considered,” said attorney Ian Wilkinson, QC.

Supreme Court judge David Batts placed Arc Systems in receivership on May 7 over a near-$26 million in debt owed to Fred Smith’s trading company, Exclusive Holidays of Excellence Limited, and named Kenneth Tomlinson as receiver. Arc Systems also owes US$8 million to foreign company Atradius Credit Insurance NV.

Tomlinson said at midweek that he had not read through the judge’s ruling, when asked for comment, saying he was focused on the job at hand.

“There is a lot on the table, and we continue to do what we have to do,” he said.

Arc Systems was founded by Norman Horne, but officials of the company have said it is independent of other members of Horne’s Arc group of companies.

The application for the stay of execution on the receivership was decided by Justice Brooks on July 5. In denying the application, Justice Brooks said among his reasons is that a longer delay in collecting on outstanding debts would harm the interests of Arc’s creditors.

He also made particular reference to an undertaking that had been given in an affidavit by Arc Systems Director Lackie Horne, the brother of Norman Horne, to pay over the judgment amount owed to Exclusive to the court.

“As that debt is a constant in this scenario, it is puzzling that that judgment has not been discharged to rid Arc of the current proceedings,” he wrote in his ruling.

To that, Wilkinson responded that Arc Systems Limited cannot pay any sum into court without the court’s permission.

“As a matter of principle, Arc Systems Limited has refused to pay the said judgment sum for several reasons, including Exclusive Holidays’ lack of status. Arc Systems

Limited has maintained consistently that the proper trustee for

Exclusive Holidays should have been the Government Trustee and no one else,” he added.

Meanwhile, a court date for the substantive appeal case is still to be set. Arc Systems is contesting Batts’ ruling on 23 grounds, a central one of which is whether Exclusive Holidays had standing to request the receivership.

neville.graham@gleanerjm.com