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Gomez And Chinese Bank Argue Against Chapter 11 Ruling

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Baha Mar’s original developer Sarkis Izmirlian.

By LAMECH JOHNSON

Tribune Staff Reporter

ljohnson@tribunemedia.net

A SUPREME Court judge yesterday dashed Baha Mar CEO Sarkis Izmirlian’s hope for an immediate approval of his motion to uphold, in the Bahamas, a recent ruling in Baha Mar’s ongoing Chapter 11 bankruptcy proceedings in the United States.

Justice Ian Winder’s decision to adjourn the matter to Tuesday, July 7, for a full hearing followed more than an hour of legal exchanges between Baha Mar’s lawyer Roy Sweeting and Queen’s Counsels Damian Gomez and Brian Simms.

Mr Gomez appeared for the Crown while Mr Simms represented China Export-Import Bank, the resort’s financier.

During the hearing yesterday, Mr Gomez, minister of state for legal affairs, described Mr Izmirlian as “the author of his own destruction,” arguing in the Supreme Court that there was no legal basis for the resort to file for Chapter 11 bankruptcy in the United States.

And during his submissions, Mr Simms called the bankruptcy filing a “well-designed ambush” staged by Baha Mar although the resort had other options.

Mr Simms asked for the matter to be adjourned, which was supported by Mr Gomez.

However, Mr Sweeting argued that an adjournment into the matter would cut very close to the seven-day deadline for his client to get an approved extension from the Supreme Court in the Bahamas for its debtor-in-possession (DIP) financing approval by the Delaware Court to take effect.

Before Mr Sweeting could move the application before Justice Winder, Mr Simms asked to have his client and the Crown to be joined as parties, given their respective interests in the matter.

Mr Simms had taken issue with his client not being made a party on the motion filed to the Supreme Court.

Mr Sweeting, however, said: “It’s certainly not practical to serve every creditor.”

“What is being sought is an important preliminary order,” Mr Sweeting said, adding that this application would facilitate “keeping the lights on at Baha Mar and keep operations going.”

Following this, he said, “these applicants are free to be joined as parties to the proceedings.”

Mr Sweeting emphasised that the motion by Baha Mar was “crucial to the short-term future of these group of companies” and that a “great many of people, including the country, have an interest in this.”

“We’re trying to get the stay imposed in the US extended to the Bahamas,” Mr Sweeting added.

As he objected to an adjournment, Mr Sweeting said that the Delaware court’s approval of debtor-in-possession (DIP) financing was conditional.

“In order to get this, it needs the automatic stay to be extended to the Bahamas,” Mr Sweeting noted, further expressing that Baha Mar’s “legion of creditors” were not being robbed of their money as they were all listed in documents filed in the proceedings in the US.

“If I hear the application to join the parties, I can hear the application on Tuesday?” the judge suggested.

“If that were the case, we’d ask for a temporary, general stay against the creditors from taking action,” Mr Sweeting said, adding: “I don’t see how the AG can speak for creditors. It could speak for the government.”

However, Justice Winder did not grant a temporary stay on creditors taking action.

Yesterday, Mr Simms said that Mr Sweeting’s clients have named “no other party in this application” and that should not be allowed.

Mr Simms referred to an affidavit on behalf of his client, which noted the $2.4 billion advanced by China Export-Import Bank to Baha Mar.

If the proceedings engaged by Mr Izmirlian were going to continue, Mr Simms said: “My client should be allowed to ensure that its securities are protected. If he wants an injunction, he must tender all monies handed over to the duty court agent of my clients.”

The lawyer also dismissed Mr Izmirlian’s purported sense of urgency through the filing for Chapter 11 bankruptcy and said the move “was a planned and well designed ambush.”

“There have been negotiations going on between the Bahamas government, and my client,” Mr Simms continued before being interrupted by Mr Sweeting, who suggested that Mr Simms “seems to be making submissions against my application.”

Mr Simms continued, nevertheless, stating that rather than dealing with his mortgage arrangement, Mr Izmirlian took the action that he did “and there was no notice.”

“They went behind the back of the (EXIM) bank and got the order of the US court,” Mr Simms said, adding, “We have interest in that order.”

“It’s affecting our securities and interfering with our rights under Bahamian law,” he argued.

Mr Simms further argued the only legal connection between the US court jurisdiction and the Bahamas was the first of 15 companies that filed under Chapter 11.

“There was always options for Baha Mar to function and pay its debts,” Mr Simms claimed, “but they’ve opted for this method for reasons of their own.”

He also refuted Mr Sweetings’ claim of urgency, stating that “my understanding is the court in the US doesn’t come back until August.”

Mr Simms ultimately asked the court for adjournment “at least until Tuesday.”

Mr Gomez, when given a chance to speak, said: “I’ll adopt the position taken by Mr Simms.”

“While we don’t have any affidavits, we could have that filed by this afternoon,” he added.

“The applicant and the government entered into Heads of Agreement where about $1 billion in concessions have been granted. Tax issues may arise because of the unilateral approach taken by the applicants,” Mr Gomez said.

He added that if such an “extraordinary” application succeeded, it would mean that Bahamian businesses owed “millions” by Baha Mar would have to get what is owed to them through the United States.

He noted that because of the country’s stake, the government should be a party given its responsibility to its citizens.

As for the resort’s employees, whom Mr Sweeting argued could be adversely affected if the green-light was not given by the Bahamian Supreme Court, Mr Gomez said the resort’s staff need not worry about immediate salaries for the month as the government was prepared to pay “each and every employee at Baha Mar.”

He went on to further criticise, Mr Izmirlian whom he dubbed “the author of his own destruction.”

He said there was no legal basis for the CEO to take the matter to a US bankruptcy court when 14 of 15 listed companies in the matter were registered in the Bahamas and was admitted in the applicant’s own affidavit.

Mr Sweeting contended that the Chapter 11 proceedings were to make arrangements for Baha Mar’s creditors to be paid and for the resort to be completed.

Save for this option, Mr Sweeting said, the resort would not open because “Baha Mar does not have the money.”

“The resort as it stands, is 98 per cent complete. The Chapter 11 proceedings was to drag this thing over the finish line,” the resort’s lawyer said, adding that it would enable Baha Mar to open and “keep Bahamian employees paid.”

On Monday, Baha Mar and 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 Company in the English High Court on Tuesday.

On Wednesday, 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 (DIP) financing request, to include $30 million to be used by the resort over the 30 days, was conditional to the approval of this country’s Supreme Court.

Comments

GrassRoot 5 years, 1 month ago

Dear PM call back your little doggie Gomez. "Mr Gomez, when given a chance to speak, said: “I’ll adopt the position taken by Mr Simms.”" He is siding with the Chinese, you said the Government would not be taking sides. . . . . . All these poor hurt little Egos.

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ghostwriter242 5 years, 1 month ago

Many of the employees at Bahamar are foreigners. Why should my tax dollars be used to pay their salaries?

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GrassRoot 5 years, 1 month ago

wrong crowd to ask this. BTW I wonder whether they also pick up Dunlap's salary. He cant vote here.

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ghostwriter242 5 years, 1 month ago

Quite a number of the employees of Bahamar are foreigners, especially the executives with the large salaries. Why should my tax dollars be used to pay them?

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jackbnimble 5 years, 1 month ago

Look at the bigger picture. The Government is trying to block Izzie from using the employees and their salaries as an excuse. He's claiming he cannot pay them as he is cash-strapped. Government says we will pay them so you don't need that as an excuse to declare you are bankrupt. It's not about the foreigners. It's about using the workers as a pawn to get the order stayed.

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GrassRoot 5 years, 1 month ago

I respectfully disagree. The payment is an excuse by the Government not to wave through the U.S. Courts rulings (or not to appear to wave them through), as it would also mean that BEC can not cut electricity (under a separate ruling by the Court), and it would also mean that our Sovereignty would go down the toilet (which may be better with this Government), as Madame AG would not be required anymore to write brilliant legal briefs on matters of National un-importance.

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ghostwriter242 5 years, 1 month ago

I'm sorry, but there is no bigger picture. Bahamar owes BEC 24 million dollars, and people like me are footing the bill each month with the high electricity rates. Also we have thousands of Bahamians with no power owing less money. The same rules should apply to everybody, and that is one of the biggest problems in this country. We need to stop sacrificing our own people.

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DillyTree 5 years, 1 month ago

ghostwriter, you do realise the $24 million owed BEC is not a new debt of Baha Mar's, right? You do know that it is the old debt that came with the purchase of Baha Mar when they bought the Crystal Palace, and that it was the government who allowed the $19 odd million to go unpaid for that long? And that that same government approved the sale while Phil Ruffin fled the island and didn't look back?

While Baha Mar has money owing, how about the $37 million that the Bahamas government owes Baha Mar for the roadworks?

By my math, the net is that the Bahamas government OWES Baha Mar $13 million.

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duppyVAT 5 years, 1 month ago

Sooooooo, what motivation does Izmirlian have to continue to be a partner in this project with the Chinese and the Government??????? Its not a stretch to see him sell out to a big hedge fund consortium like Atlantis ............ can we remember when Sol Kerzner got pissed with the Government's slow response to his demands and went to Dubai????????? .................. and the rest is history

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ThisIsOurs 5 years, 1 month ago

Wouldn't blame him, he's forever screwed with this government. He clearly thinks the PM is in league with the Chinese. And if the reports on the law/lobbyist firm representing them is true, he's right.

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duppyVAT 5 years, 1 month ago

The last time Perry said that he "had no horse in the race" ............. can you remember how that turned out for Bahamians???????

I am sure Bahamar boss heard Perry's "take no sides" remark.....................and ran like hell!!!!!!

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banker 5 years, 1 month ago

Does anyone else see sovereignty issues here with Gomez, the scumbag son of the Arch Homophobe and the representative of the crown being joined with the Chinese company, which in fact is controlled by the communist Chinese government?

Does this not announce to the world that the Bahamas has surrendered it sovereignty to the Chinese?

We all know that the Chinese culturally think that Black people are inferior ( 7 Examples of How Blacks Are Discriminated Against in China http://atlantablackstar.com/2015/01/1...">http://atlantablackstar.com/2015/01/1... ) , and that stinking heap of human garbage called Allyson and Damien rush in to wipe the azzes of the Chinese?

Have we no more patriots left? Have we no self respect as a government? Is our government that callous, criminal, unpatriotic and sub-human? The PLP in form of Lynden Oscar Swindling sold the country to Columbian cocaine cartels for 20 years. The PLP under Perry Crisco-Butt sold us to the Chinese for the next hundred years until these islands in the sun with be worthless rocks filled with half-wild beggar criminals of the lowest kind.

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Publius 5 years, 1 month ago

Darn, there is no way to click like!

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DEDDIE 5 years, 1 month ago

I can understand why Bahamar would choose to file in the US and not the Bahamas. Our laws have not sufficiently evolve to deal with complicated bankruptcy cases. At present if a company declares bankruptcy in The Bahamas our laws requires a receiver to be appointed who would then move to satisfy respective creditors. This process then get stall for years because of in-adequate legal structures (Gulf Union Bank, Clico etc). The Government decided to side with the Chinese because like the old cliche states "who has the money makes the rules."

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Publius 5 years, 1 month ago

Why is a Minister of the Cabinet standing before a Judge seeking to get that Judge to rule in that Minister's favor? The Crown has scores of lawyers. Why is a Member of the Executive in the courtroom dealing with this matter - a Cabinet Member who has responsibility for areas of the Judiciary?

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