By LAMECH JOHNSON
Tribune Staff Reporter
BAHA Mar’s prospects of opening in the “foreseeable future” are unlikely on its current path, British Queen’s Counsel Peter Knox told a Supreme Court judge yesterday.
Mr Knox appeared as the government’s lawyer in the Supreme Court yesterday as arguments began on the Crown’s winding up petition against Baha Mar.
He raised this and many other arguments during the hearing in an effort to convince Justice Ian Winder to facilitate the appointment of provisional liquidators who will make arrangements between the resort’s stakeholders to speed up the development’s completion.
The government is seeking to wind up Baha Mar Ltd, Baha Mar Land Holdings Ltd, Baha Mar Properties Ltd, BMP3 (Wyndham Hotel) Ltd, BMP Golf Ltd, Cable Beach Resorts Ltd and Baha Mar Enterprises Ltd on the basis that is owed upwards to $59m by the mentioned companies.
“There’s no real prospect for the completion of the project in the foreseeable future as it stands now,” Mr Knox told the court. “There was a prospect… there was a deal on the table requiring Mr (Sarkis) Izmirlian to come up with a guarantee of $200m.”
Mr Knox stressed that the project needed to “be put back on track to avoid a downgrade in The Bahamas’ credit rating and the employment situation”.
“It is in the public’s interest that this company is wound up,” he added, citing the number of concessions given to the resort and its inability to open as a failure to deliver on its promised national benefits.
On June 29, Baha Mar and 14 of its affiliated companies filed for bankruptcy in a Delaware court, blaming the resort’s contractor, China Construction America (CCA), for the construction delays that caused it to miss previous opening deadlines.
The resort also took legal action against CCA’s parent company China State Construction Engineering Corporation (CSCEC) in the English High Court.
On July 1, US Judge Kevin Carey approved the resort’s request to begin tapping into $80m in financing to keep the resort on track for opening while it undergoes Chapter 11 bankruptcy proceedings in that state.
However, the Delaware judge’s approval of the debtor in possession financing request was conditional on the approval of the Bahamas’ Supreme Court.
Justice Winder, who presided over Baha Mar’s application for the foreign court’s ruling to take effect, dismissed that application.
At the very start of yesterday’s proceedings, Mr Knox was in defence mode after Baha Mar’s legal team of fellow QCs, James Corbett and Maurice Glinton, sought to challenge the attorney general’s jurisdiction in bringing the petition against a number of Baha Mar’s affiliated companies.
Mr Knox informed the court that seven new petitions had been filed against Baha Mar in addition to the original one if the judge accepted Baha Mar’s position that the attorney general’s petition was invalid.
Mr Knox said the government was not seeking to wind up the multi-billion dollar resort today, but merely to have provisional liquidators appointed who will make arrangements between the parties to speed up the resort’s completion.
Wayne Munroe, QC, who appeared on behalf of the government’s petition to have outstanding gaming taxes returned, defended Mr Knox’s submissions that the government’s counsel should be heard first before Baha Mar’s application to strike out the petition was made.
Justice Winder went on to rule that Mr Knox would give submissions first on whether the government’s petition is valid before giving the floor to Messrs Corbett and Glinton on the point they raised.
However, neither of Baha Mar’s lawyers had an opportunity to present their submissions yesterday as Mr Knox took up the remainder of the court hearing with his arguments.
Mr Knox spent some four hours expanding on the first four of five arguments: whether the respondents (Baha Mar) are insolvent; if the petitioners have legal standing as creditors; were there just and equitable grounds for the petition; should provisional liquidators be appointed; and who will be the provisional liquidators.
Addressing the first point, Mr Knox made repeated references to documents filed in Delaware at the end of June where the estimated liabilities of six of the seven named companies were more than $1 billion and more than exceeded its assets.
Concerning the second basis for the petition, Mr Knox argued that the government is a current creditor of Baha Mar given that the resort owed a substantial amount of money to a number of public entities.
The greatest sum – some $26.33 million – is owed to the Bahamas Electricity Corporation (BEC), Mr Knox highlighted.
Other debts include: $3.087 million owed to the Water & Sewerage Corporation; $3.342 million in real property tax arrears; $303,337 in business licence fees (broken down into $289,854 owing for the Wyndham hotel and a further $13,482 due on the Cable Beach golf course) and a total $697,446 in unpaid National Insurance Board contributions, including interest, on behalf of staff for the months of April and May 2015.
Baha Mar also allegedly owes the Gaming Board some $11.219 million in unpaid casino taxes.
Mr Knox said while Baha Mar would dispute the amounts owed, it is not disputed that it owes the government entities.
On the third issue, Mr Knox argued that it was “clear from admitted evidence that the government’s loan to the project was for the development of Baha Mar for the benefit of the people of the Bahamas.”
Mr Knox said that between China EXIM Bank’s $2.45 billion loan and the government’s $1 billion in concessions, the resort was supposed to become one of the largest employers in the country and a significant contributor to GDP over the next two decades.
“This project was always for national benefit and now that it cannot be satisfied, it must be wound up,” Mr Knox said.
He is expected to conclude his submissions today when proceedings continue at 10am.