By NATARIO McKENZIE
Tribune Business Reporter
A BAHAMIAN judge’s refusal to recognise Baha Mar’s Chapter 11 proceedings and orders has been described by China Export Import (EXIM) Bank as “detrimental” to the bankruptcy cases and an “insurmountable obstacle” for the developer, as it called for their immediate dismissal.
In CEXIM Bank’s reply to Baha Mar’s objection to China Construction America (CCA) Bahamas’ motion to dismiss its Chapter 11 cases in Delaware, the bank said that Baha Mar had ignored the most important and detrimental fact to the Chapter 11 cases being the Bahamian Supreme Court’s refusal to recognise the cases.
In its reply filed on Friday CEXIM Bank said that the “Bahamian debtors cannot effectuate a successful reorganisation”, due to that refusal. “The debtors do not even attempt to suggest how they might overcome this insurmountable obstacle, nor does the Committee offer any proposal to bridge the gap. This is because they cannot. In these circumstances, immediate dismissal of the chapter 11 cases is warranted,” said CEXIM Bank in its filings. Last month Justice Ian Winder refused an application by Baha Mar to have the bankruptcy proceedings and orders recognised. Earlier this month however the judge granted the developer leave to appeal that decision.
CEXIM said that the debtors and the creditors committee have focused on the allegations that the bankruptcy cases were filed in good faith and that maintaining Chapter 11 cases would be in the best interest of creditors. “Yet, each of these points is based on the misconception that the Debtors will be able to enforce against foreign creditors and a foreign government, and in foreign jurisdictions, any relief granted by this Court,” said CEXIM Bank. “The debtors assert they chose this forum because it provides the “only true option to restructure”. This option is illusory because the debtors will not be able to implement and enforce the orders of this Court that would be necessary to implement a successful restructuring of the Bahamian Debtors. Similarly, the Chapter 11 cases could only be in the best interests of creditors if they could provide a path to an effective reorganisation.”
The bank added: “Moreover, with the debtors now arguing that by filing the motion to dismiss CEXIM has submitted itself to the jurisdiction of this Court, the debtors’ litigation strategy has become clear. The debtors commenced these Chapter 11 cases and shortly thereafter sought recognition of the cases and the automatic stay in The Bahamas. CEXIM opposed the debtors’ request for recognition, was successful, and then filed its motion seeking dismissal of the Bahamian debtors’ Chapter 11 cases. The debtors’ only hope to try to get these cases to “stick” is to tie CEXIM’s hands. During a telephonic hearing with this Court, debtors’ counsel argued that CEXIM was prohibited from opposing the recognition order, and now the debtors argue that by seeking to have these Chapter 11 cases dismissed, CEXIM has submitted to the jurisdiction of this Court. The law simply does not work this way to prevent a foreign creditor from protecting itself from the imposition of US law in foreign jurisdictions.”
CEXIM Bank argued that the dismissal of the Bahamian Debtors’ Chapter 11 cases will clear the path to “an efficient and fair restructuring of these debtors under Bahamian law with the full support and co-operation of the Bahamian Government. Contrary to the debtors’ assertions, Bahamian insolvency law can provide a viable option to accomplish an effective reorganisation of these entities.”
CEXIM noted that its only participation in the Chapter 11 cases to date has been to file a motion to dismiss them. The bank argued that that move cannot create a reasonable expectation that it will meaningfully participate in the Chapter 11 cases. “In fact, there could be no clearer statement than the filing of a motion to dismiss the cases to demonstrate that CEXIM has no desire or intent to adjudicate the merits of any dispute between CEXIM and the debtors before this Court or otherwise seek to avail itself of the protections of this Court or the Bankruptcy Code. The CEXIM Motion to Dismiss, if granted, prevents the adjudication of any of CEXIM’s rights or treatment in this Court.”