The country's largest bus company went into receivership today.
Novelo's owes the DFC and Atlantic Bank $45 million and today both companies appointed a manager to take over the business. This receiver is Kevin Castillo and he is accompanied by general manager former Brigadier General, Bob Garcia. He took over operations today and is now in charge of bringing the company around to where it can service its long delinquent debts of $30 million to the DFC, and close to $15 million at the Atlantic Bank.
How will Castillo do this? Known widely as an auctioneer, this evening new point man at Novelo's told Keith Swift why receivers have had to step in.
Kevin Castillo, Novelo's Bus Company Receiver/Manager
"Novelo's bus has been put into receivership by both Atlantic Bank Limited and the Development Finance Corporation."
Keith Swift,
"What does that mean?"
Kevin Castillo
"It simply means that the management that used to be the Novelo brothers have been removed from the company and it will now be managed by a group under my leadership."
"It went into receivership because the company was not servicing its creditors."
"We are running the company as a going concern. So you shouldn't expect to see the sales of anything or anybody being fired. We coming together, getting stronger as soon we possibly can and putting the systems in place to make sure that we start serving the public much better than before. So the objective is really to provide much better service to the general public and in a short period of time you should see a change."
"The management team right now is basically set up to ensure it improves and when it improves anything can happen. So right now we are here to improve the quality of service to the general public and we will move forward from there."
"And if things work out right, after a period of time we might be able to pass the company back to the Novelo brothers."
Late this evening - the Novelo's Company hand delivered a press release saying that it owes both DFC and Atlantic Bank a total of $48 million. The release says that, "Novelo's finds this debt to be unpayable given the high interest rates, and high operational costs and the fierce cut-throat competition in the transport business." It continues "Novelo's had been given certain commitments by government...which were never honored". It goes on to say that the companies have been operating at a loss of 9.2 million dollars per year and closes by thanking the customers it has served for 45 years and its 440 employees.
But today at the bus station there wasn't much love for the Novelo's. Regular folks who just want to be sure that bus service will at least continue or at best, improve told Keith how they felt.
Novelo's Bus Commuter #1,
"I don't what to say. We have to see how it will run first but right now it is running there is a lot of problems. You trouble getting on the bus, you have to run and fight to get on the bus. So we will see how it will be."
Novelo's Bus Commuter #2,
"Only I know like is that at rush hour they bring up the bus at the exact it is supposed to leave and it is a big rush and I really don't like that. They treat we like animals even though we have our ticket. It's like a stampede. So I would look forward to nicer drivers and conductors."
Novelo's Bus Commuter #3,
"I never satisfied with the way they were running the company. I think they need better buses and thing."
And while consumers want better for their future - most just want to know how such a bad situation went so far for so long? Well the bottom line is that Atlantic Bank was ready to act against Novelo's from the end of 2002 - but government intervened - to preserve a floundering mega-company, which it alone had created with DFC financing.
But now it seems that even government's patience has worn out - and, according to our reports, GOB was the one, which finally gave the nod to move on Novelo's.
And while regular bus operations will now be managed by the receivers, the lucrative "Beli-Tour" company which runs charter tours for Carnival Cruise line will remain untouched.
But while "Beli-tour's" profitable operations are secure - the Novelo's boys, David and Tony may not be so lucky. 7NEWS has confirmed that they have placed personal guarantees to secure the loans - and those assets including properties - are now being eyed by the banks.
And what about the $30 million for DFC? Well the last we checked that was bundled off in a bond offering - which has a sovereign guarantee - meaning that if Novelo's can't pay it - GOB has to step in with your money to mop up the mess.
And a mess it is, but to make sure it didn't become a bloody one, the police department was today placed on standby countrywide to guard against unrest. Also from this weekend, police near the border were deployed to ensure that no Novelo's bus was taken into Guatemala to harbor them from the scrutiny of creditors.