The Jamaica Star :: Features :: When does a company go into receivership?

Ever since alternative investment scheme Cash Plus Ltd went into receivership last month, it has generated great public interest and debate.

"The budget has taken second place to Cash Plus," a businessman remarked this week.

"I listened to many radio programmes and the people were only interested in what is happening to Cash Plus and whether the investors would be getting back their money.

"Well, my cousin invested $300,000 in August last year and managed to get a few months' interest.

Substantial portion

"My friend who is a pensioner invested $1 million in October last year for one year, after which she would collect the principal and interest, and I am sure if she does not get back her money, it is going to take her to her grave.

"It breaks my heart to see her burst into tears whenever she discusses the matter or hears any discussion or news about Cash Plus. I am hoping that those who took the risk to put their money in Cash Plus will at least get back a substantial portion of their money," the businessman said.

But there are others who have no sympathy for the investors. There have been comments like "They know it was risky investment so if they lose, they cannot complain."

Some people do not really understand why the company is in receivership and why a receiver-manager was appointed.

A company goes into receivership when its debt exceeds its income.

Cash Plus went into receivership because one of its managers went to the Supreme Court and applied for a temporary receiver-manager to be appointed. The application was made under the Companies Act.

A receiver-manager has to locate the assets of a company whether they are in Jamaica or overseas. If there are assets (which can include money and properties) they will have to be valued and investors paid a portion of their investments, which is usually a certain percentage on the dollar. If there are no assets, then the investors will not be paid.