THE Government has filed a winding up petition in the Supreme Court against Baha Mar after talks involving the developers of the troubled $3.5 billion mega-resort in China this week failed to reach an agreement. (BAHA MAR RESPONDS HERE)
The move comes after Baha Mar filed for Chapter 11 bankruptcy in the United States more than two weeks ago and negotiations in Beijing involving the government, the resort developer, China State Construction and China Export Import Bank proved fruitless.
In a televised address to the nation tonight Prime Minister Perry Christie said the opening of Baha Mar was “a matter of the utmost national importance”.
“Whilst we certainly remain open to further discussions, my Government has taken the decision to seek to bring the Baha Mar development project under the control and supervision of the Bahamian Supreme Court, right here in The Bahamas,” Mr Christie said. “Consequently, on the advice of our Bahamian, UK and US lawyers, the Attorney General has today filed a winding up petition in the Bahamas Supreme Court against the 14 Bahamian entities that filed for Chapter 11 protection in the United States at the end of June.
“These compulsory or involuntary winding-up proceedings are designed to work in very similar terms as a Chapter 11 but with the stark difference that they will be controlled by provisional liquidators under the supervision of the Bahamian Courts rather than being controlled by Mr (Sarkis) Izmirlian (the developer). These liquidators, if appointed by the court, will be neutral and impartial professionals of the highest quality and of impeccable credentials.”
The Prime Minister said the role of the liquidators would be to expedite the resolution of the matter and to prepare a plan for the restructuring of Baha Mar that would result in the earliest possible completion and opening of the project. He said the action taken was not designed neither to punish Baha Mar nor destroy it. “On the contrary, the purpose of the provisional liquidation is to enable the appointment of a neutral party to take control of the process and to work with the key stakeholders under the supervision of the Bahamian Court to prepare a strategic and workable roadmap for the completion and opening of the resort,” he said. “Such a solution will recognise and respect the rights and legitimate interests of the key parties, including Baha Mar and the Bahamian people.”
Baha Mar were understood to be “shocked” and "surprised" at the move.
Of the Beijing meeting and the events that led to the filing of the winding up petition, Mr Christie said: “After working diligently around the clock to arrive at a solution acceptable to all parties, and having made considerable progress, the talks nonetheless ended without agreement whereupon the (government) delegation returned to Nassau this morning and promptly reported to Cabinet along with its legal advisors.”
Mr Christie said it had transpired at the Beijing negotiations that Baha Mar’s additional funding requirements had increased considerably, and now included not only funding for completion of construction, but funding to meet start up and operating expenses, funding to cover other liabilities and deferral of principal and the initial balloon payments under the loan facility with Eximbank.
“I am advised that both Eximbank and China Construction Company demonstrated flexibility in meeting Baha Mar’s expanded funding requirements, and project completion date,” the Prime Minister said. “This notwithstanding, Baha Mar still wanted an extended period for further negotiations which, however, was not acceptable. Baha Mar was also not prepared to agree to terms which would have included the immediate discontinuance of their Chapter 11 Bankruptcy proceedings in the United States and their legal action against China Construction in the United Kingdom. These terms were demanded by Eximbank and China Construction, and supported by the Government, as conditions to any agreement for additional funding, resumption of construction and project completion date.”
A Supreme Court hearing is scheduled for Monday.
Mr Christie said the government has arranged for a second payment of salaries of Baha Mar’s Bahamian employees, with a view to such payments being recovered in due course so as not to place any additional strain on the Bahamian taxpayer.
Read the Prime Minister's full speech here.