The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

No Bahamian companies are directly represented on Baha Mar’s unsecured creditors committee in the Chapter 11 bankruptcy proceedings in Delaware, the membership of which was published last night.

Osprey, the Bahamian contractor, is the closest to local representation that this nation has, although the creditors committee seat will likely be filled by its joint venture partner on the Baha Mar project, Yates.

Their joint venture was listed as the third largest unsecured creditor behind China Construction America, at $72.6 million, and the Bahamas Electricity Corporation (BEC) at $19.5 million - neither of whom have been appointed to the committee. Yates-Osprey’s joint venture is said to be owed $5.28 million.

Other members of the Baha Mar creditors committee include SBE Hotel Management, the SLS brand operator, which gives Baha Mar’s hotel operating partners a seat at the table.

Also present is Terracon Consultants, who are understood to have been the ‘structural engineers of record’ for the Baha Mar development in partnership with Bahamian firm, Integrated Building Systems (IBS).

Another creditor committee member, Suddath Global Logistics Bahamas, while appearing to be a Bahamian company, is headquartered in Jacksonville in Florida, based on its mailing address.

The final three creditor committee members are Purchasing Solutions International from Fort Worth, Texas; Las Vegas-based Schadler Kramer Group; and AECOM Technical Services, another US company.

Meanwhile, in other developments, the US Bankruptcy Court gave a preliminary ruling that a payroll and employment services provider could not be required to pay $250,000 in collective salaries to Baha Mar’s US call centre employees.

Judge Kevin Carey, in what is effectively the equivalent of a temporary injunction, said: “The debtor [Baha Mar] cannot require Strategic Outsourcing to fund the debtor’s payroll prior to Strategic Outsourcing’s receipt of sufficient funds from the debtor to cover such payroll.”

Strategic Outsourcing had previously argued that it “should not be forced to be a lender” to Baha Mar and finance salary payments due to the latter’s US employees because the Supreme Court in the Bahamas had yet to give effect to the Chapter 11 proceedings.

That is the initial block to Baha Mar accessing the $80 million funding facility put in place by its principals, and Strategic Outsourcing alleged: “The debtor [Baha Mar] wants to obtain the benefits of the continued labour of its employees, but wants to shift the burden of paying those wages to a third party.

“Further, under the circumstances here, the timing of repayment to Strategic Outsourcing, indeed any repayment at all, is subject to question.

“That is because repayment depends substantially, if not entirely, upon the funding of the debtor’s post-petition financing. That funding, in turn, is contingent upon, among other things, the agreement of a Bahamian court to recognise these proceedings.

“There can be no assurance that the Bahamian court will take the required action. Strategic Outsourcing should not be required to bear the risk that the Bahamian court will not take the action that is needed to effect a cure of the event of default.”

The default refers to the fact that a condition of the $80 million facility was that it be approved by a Bahamian court within a week of the June 29 filing for Chapter 11 - something that has not happened.

In response, Baha Mar had argued: “The Debtors have advised the [US] employees that they are working to have payroll funded as soon as practicable, but cannot do so until the DIP facility is funded.

“Indeed, the debtors are working tirelessly in the Bahamas to obtain the necessary order and approvals to enable the DIP facility to be funded.

“The purpose of the [Supreme Court] adjournment was to allow the various parties an appropriate amount of time to attempt to resolve all construction and financing disputes and, thus, pave the way for the Bahamas court to enter the requisite order.”

Baha Mar alleged that Strategic Outsourcing was a joint employer of its US staff under their agreements, meaning it had an obligation to finance payroll.