Staff made redundant at Horizon Communications recently have been told it is highly unlikely they will receive any severance pay or other monies owed, The Royal Gazette has learnt.

Gilbert “Artie” Darrell, founder and chief executive of the telecommunications firm, which is under receivership, wrote to staff this week explaining that the company remained indebted to the lender, an affiliate of the Bermuda Investment Fund, and would be placed into liquid insolvency.

The joint receivers did not anticipate that there would be sufficient assets to repay the employees and any claims for money not paid would be handled by liquidators once they were appointed, he said.

However, one former staff member told The Royal Gazette: “Key to this is the fact that Horizon Communications is still operating as opposed to winding up with no money.”

Mr Darrell said that following the sale of Horizon’s assets, joint receivers Charles Thresh and Mike Morrison of Teneo (Bermuda) did not foresee there being sufficient assets to meet the debt to the lender.

He said secured creditors, such as the lender, were paid first and if there was surplus funds after those payments, they would be available to “unsecured creditors”, such as the employees.

However, he added that the joint receivers did not expect there to be a surplus of funds to do so.

Staff were laid off on January 12 after the company ran into financial trouble as a result of being unable to secure funding from the lender of the investment fund, managed by Fortress Investment Group.

Under the Employment Act 2000, in the event that staff are laid off for a period of four months, they are automatically made redundant.

Despite cost-cutting measures including the layoffs and trading on a limited basis, Mr Darrell said that there was no significant change to the circumstances during the layoff period and that staff were considered terminated on May 12.

He explained it was for this reason staff did not receive termination letters from the company. He did say, however, that the joint receivers sent redundant staff a letter on May 15 to inform them of their employment status.

It was noted that staff remained entitled to bring claims against the company.

The former staff member added: “The employees were given the impression from the early stages of the involvement with the receiver that they were very positive that a solution could be found. That solution could have involved a new company purchasing Horizon.

“The receivers were forthcoming and said that the company would always have their best interests under consideration, but as time passed over this past four months for those on layoff and now made redundant, the information that they have been given is somewhat confusing, lacking in detail and has really given them no confidence that a solution will be found.

“Now the employees have received notification that because of the legislation, they have been made redundant after four months of layoff. Along with the redundancy notification came the revelation that it was very unlikely that any of the staff would receive their severance packages or owed salaries, which is very clearly laid out in the Bermuda Employment Act for redundancy.

“The Act is very clear if you are made redundant the company has seven days or the next nearest regular pay cycle to pay all due severance or salaries owed, which according to the dates we were made redundant would be tomorrow.

“They are saying the employees would have to deal not with Teneo, not with Horizon but with the liquidator they appoint. The staff have been given no indication when that may happen or who the liquidator might be.”

Asked why, if the company was still operating, staff were being told they were unlikely to receive their pay, who the liquidators were and when they would be appointed, Mr Darrell told The Royal Gazette: “That is a decision made by Teneo alongside Fortress. The letter that was sent was the full sum of information I know on the matter and the only response I've received.

“As the company is still operating, there has not been liquidators appointed. I do not know when the liquidators will be appointed or when the company will cease operations.”

Another former employee added: “Teneo have handled the whole situation badly. They have now had Gilbert Darrell send out an e-mail stating that none of the employees will receive any money due to them because there will be no money left over after they have been paid.”

Teneo was approached for comment but did not respond by press time.