By NATARIO McKENZIE
Tribune Business Reporter
nmckenzie@tribunemedia.net
The Bahamian Contractors Association’s (BCA) president has slammed the industry’s fall in the Baha Mar creditors queue as a “terrible situation”, which will make it harder to recover the collective $74 million owed to the sector.
Tribune Business revealed last week that Baha Mar’s Bahamian contractors, vendors and 2,000 laid-off staff have fallen further down the creditors queue as a result of the $50 million loan extended to the development’s receivers, Deloitte & Touche, to cover costs associated with preserving and maintaining the resort assets.
The $50 million came from China Harbour Engineering Company (CHEC), which is constructing North Abaco’s new $39 million shipping port, rather than the China Export-Import Bank which, as Baha Mar’s secured creditor, should be financing the receivers.
The $50 million is not only a loan that must be repaid, but is also a “preferential” financing that now ranks ahead of all other creditors - including the bank. The net effect is to drop Bahamian creditors further down the queue, lessening the prospects that they will recover some - let alone 100 per cent - of what is owed to them.
Leonard Sands, the BCA’s president, told Tribune Business of the situation: “I don’t know if that is something that is allowed. I’m not sure.
“I know one thing, though. If it does do that, that certainly is not something that we would wish to have had happen. If it does do that, the question would be: If they could borrow $51 million, could they could borrow more and pay us out?
“If they can come up with $50 million, why can’t they come up with $100 million to pay most of our contractors. Then you would only be left with that creditor. That would at least make our troubles do away. It seems sensible to me.”
“I would say that if we get pushed further down the list that would be a terrible situation,” Mr Sands added.
Prime Minister Perry Christie said last month he has told the China Export-Import Bank that the Government will not compromise its position that Baha Mar’s Bahamian contractors must be paid the total $74 million owing to them.
Comments
JohnBuchanan 8 years, 4 months ago
He does not seem to understand that no buyer or new financier has any obligation to pay old debt. In bankruptcy, old debt dies with the old owner (Izmirlian). Any new buyer is acquiring the assets, not old debt. Prime Minister Christie appears to be totally clueless about how business is conducted, at least in the real world outside the Bahamas, and if he continues to insist that the old contractor debt and salaries of 2,000 redundant employees be paid, he could very easily kill any deal. The only hope the Bahamas has now is to find a buyer for a hard to sell, almost dead project.
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