By LAMECH JOHNSON
Tribune Staff Reporter
JUSTICE Ian Winder said on Friday that he required two weeks to come to a decision on whether to grant - or strike out - the government’s winding up petition for the appointment of provisional liquidators to speed up completion of the stalled Baha Mar development.
The adjournment of the matter to September 4 followed three full days of legal arguments from counsel for the government and the Cable Beach resort on the former’s attempt 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 of $59m by the various companies.
In Friday’s proceedings, Baha Mar’s Queen's Counsel James Corbett completed the submissions he had begun on Thursday.
He and fellow QC, Maurice Glinton, argued that Justice Winder was duty bound to void the proceedings having been notified on Wednesday that the government’s filed petition was allegedly in breach of Order 24 (1) of the Companies Liquidation Rules (CLR).
It was a direct response to the government’s attorney, Peter Knox, QC, who told the judge on Wednesday 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 initial petition was invalid.
Mr Corbett, on Friday, further argued that the petitioners had put forth no authority case that the “public’s interest” was a ground to justify the petition.
“Public interest is not at the heart of this petition,” he said, adding that the argument “would have to be provided for in legislation, which it is not in Bahamian law”.
“That being the case, no winding up petition should be made with allegations that are not supported and founded on no statute, or case, or evidence that goes to the heart of the petition.”
Mr Corbett added that even if the court accepted the view that the resort and affiliated companies were insolvent, “the applications do not meet statutory requirements”.
He stressed that the appointment of provisional liquidators, according to the law, “is not a matter of right but of discretion. Your lordship always has discretion,” Mr Corbett said.
He expressed scepticism that the appointment of provisional liquidators, as had been argued by the government, was merely to have provisional liquidators make arrangements between the parties to speed up the resort’s completion.
He stressed that it was not in the public’s interests that provisional liquidators be appointed, expressing doubt that the prospective provisional liquidators would be picking up shovels to complete the work if they are, in fact, appointed.
Mr Knox, in response to Baha Mar’s strike out application, maintained that the respondent companies “are undoubtedly insolvent and have been for two months”.
“Every day that passes, creditors interests are at risk,” Mr Knox argued, adding that the public interest was also at risk with international credit rating agencies suggesting a downgrade in the country’s credit rating if Baha Mar’s dilemma is not immediately resolved.
Mr Knox further argued that the respondents have not answered the point that it was necessary to put mechanisms in place by the Supreme Court to protect both the resort's assets and the creditors' interests.
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 request.
Justice Winder said on Friday afternoon he would deliver a ruling on September 4 concerning the winding-up petitions.
If the government's petitions are approved, provisional liquidators could be appointed from Ernst and Young, though an issue of a potential conflict had raised in an affidavit filed by the petitioners and addressed by Baha Mar’s legal team on Thursday.
Ernst and Young’s legal representative in the proceedings - Megan Taylor - said the assertion that the firm could not be a provisional liquidator is unsustainable as the company is not a creditor of Baha Mar.