A construction firm head is to sue another group in the sector over an alleged attempt to sell an insolvent business.
Jason Smith, of Smith Hauling & Excavation, filed a writ in the Supreme Court against Dennis Correia, Correia Construction and Corcon Limited for $192,000 plus profits on jobs carried out for Mr Correia’s construction empire.
Correia Construction’s closure was announced in The Royal Gazette on Monday and Mr Correia, its chief executive, blamed a “huge shortfall in cashflow” of $3.4 million.
The statement highlighted the stalled Caroline Bay development at Morgan’s Point for a failure to pay up $750,000 for work done on the project in 2018.
The company has handled a variety of construction projects, including Heritage Wharf in Dockyard and the Hamilton Princess & Beach Club marina, as well as docks and residential work in the Caribbean.
Mr Smith’s writ, filed on January 6, claimed that Mr Correia “induced” him to begin negotiations on or around March 1, 2018 to buy Correia Construction.
The document added that Mr Smith later approached Butterfield Bank for finance for the deal.
After a purchase price, which was not revealed in the writ, was agreed, Mr Correia was said to have informed Mr Smith that he could no longer afford to keep the company afloat.
The writ claimed that Smith Hauling & Excavation agreed to handle three Correia Construction projects: excavation work at the Botanical Gardens and at Bermuda High School, as well as transport, equipment rental and storage of aggregate and sand for the new Belco North Power Plant.
It alleged that Mr Smith and his business “commenced fulfilling the contracts”, based on an assurance of repayment of the $192,000 paid to Correia Construction plus profits from the projects and “made a series of transfers” to the firm’s account.
The writ claimed Mr Correia told Mr Smith that Correia Construction was insolvent and that he needed to “shuffle” the assets of Corcon Ltd into the company for a “balancing of the books”.
Mr Correia is listed online as a co-director of Corcon with Danielle Correia, his daughter.
The writ claimed Mr Correia ran Correia Construction while it was insolvent, and tried to use Corcon for “novel contractual arrangements” using Correia Construction equipment with “the express purpose of usurping the statutorily enshrined requirement to cease operating a company when it becomes insolvent”. The court document added that Mr Correia aimed to injure Mr Smith and had been “unjustly enriched” at Smith Hauling & Excavation’s expense.
Mr Smith and his business, represented by law firm Forensica Legal, asked the Supreme Court for an injunction to stop Mr Correia from removing assets from the island, as well as a block on operations by Correia Construction and Corcon until a ruling from the court.
The plaintiffs also seek damages for “intentional economic loss”.
Mr Correia said yesterday that “we are strongly contesting their claim”.
He apologised to Correia Construction staff and creditors in Monday’s advertisement and added that he planned to work with liquidators to settle the company’s debts.
A spokesman for Mr Smith said yesterday that he intended to pursue Mr Correia “to the fullest extent of the law, including but not limited to seeking a court order for the seizure of any company and/or personal assets up to the value of the sums owed to us”.
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