Richard Coulson insists a Bahamian Chapter 11 procedure is the only way forward for Baha Mar.
Last week ended with a blizzard of media activity about Baha Mar.
The first came on Thursday evening, with the Prime Minister addressing the nation on the return of the ‘Allyson Adventure’, the Attorney-General’s flash descent on Beijing, and announcing the actions he would now take. By noon on Friday came a sharp riposte of disagreement in a statement from Baha Mar’s press agents (which went too far in suggesting a government seizure of private assets). Finally, on Friday evening out came rebuttals to the riposte from both the Prime Minister and Adventurer Allyson.
This battle of vocabulary has given us nothing tangible: not a stroke of paint nor yard of carpet laid nor a single man-hour of work on the silent Cable Beach towers. Instead, we now enter another week of deep doubt about whether we can truly “all look forward to the opening of the resort in the near future”, in the Prime Minister’s words. Today, a crucial hearing in our Supreme Court will determine how soon that may be. Justice Winder will be asked to rule on the Chapter 11 motion originally argued on July 1.
To this layman’s eye, his decision is clear-cut - he should simply order Bahamian co-operation with the Chapter 11 petition in the Delaware court, as was requested by Baha Mar and opposed by Adventurer Allyson. But he now faces a legal hurdle. Last Thursday the Prime Minister announced that in the very same Supreme Court “the Attorney General has today filed a winding up petition against the 14 Bahamian entities that filed for Chapter 11 protection in the United States”.
Thus two bluntly competing motions face each other today, each to be vigorously argued by counsel. I cannot predict which will prevail in our court system, proud of its independence from political pressure by the executive branch. If the dispute becomes a lawyers’ paradise with reference to Court of Appeals and Privy Council, any work on Baha Mar will indeed be a distant prospect.
In an earlier column, I stated my reasons for favouring the Chapter 11 procedure and I need not repeat them here. I disagreed with the opposing position of Adventurer Allyson, who did little more than wave the emotive flag of “loss of sovereignty”. More cogent than my views is the opinion of Robert “Sandy” Sands, a solid Bahamian and respected Senior Vice President of the hotel project. Writing in both our leading dailies, after careful analysis and intimate knowledge of Baha Mar’s difficulties, he clearly explained his reasons for endorsing Chapter 11 as the best way to resolve the issues.
Now the Prime Minister himself has unlimbered the heavy artillery in favour of involuntary winding up proceedings, similar to 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.” That last phrase, “controlled by Mr Izmirlian”, is an outrageous distortion totally unfair to Baha Mar. Under Chapter 11, Izmirlian will have no control whatever; that will be in the hands of the Delaware Court acting in co-operation with local courts.
In addition to this shocking mis-statement, the Prime Minister defends local procedures by referring to the 2011 amendment to our Companies Act concerning winding up. Yes, this amendment does modernise the procedures, but still lacks the essential creditor “stay” protections of Chapter 11. The Prime Minister cites “the well-known case of Charter Oil” to show that a Bahamian company was re-structured under Bahamian law by Bahamian judge Harvey da Costa. Correct, except that the matter was decided back in 1979 in a totally different context of international oil dealing. Charter’s parent company, a US conglomerate, was iiself later liquidated under Chapter 11.
Perry Gladstone Christie is a warm-hearted Bahamian patriot whose ambition to do his best for his country has no peer. But on Baha Mar, advised by Cabinet members with their own ambitious agenda and no experience in running a business enterprise, he has been led sadly astray. His efforts to date have led nowhere. His series of meetings here and in China over the past few months, allegedly as a useful mediator towards a solution, have given us nothing but windy platitudes of “optimism” and now “being on the right track”.
Finally he resorted to the desperation tactic of Adventure Allyson, dispatching Allyson Maynard-Gibson, the Attorney General, together with the esteemed but ageing Sir Baltron Bethel and eight (yes, eight) senior functionaries to spend two jet-lagged days in Beijing to perform the magic trick of helping the Chinese and Baha Mar pull a rabbit out of the hat. After 30 hours of round- trip jet flight, the team returned to report ... guess what? No rabbit. A nice penny of public funds was spent on Mission Implausible.
As if he was expecting the result, the Prime Minister promptly went on national television to issue his long statement in support of an involuntary winding up, essential because all negotiations had failed. That was immediately rebutted in the Baha Mar release, which reads, “Discussions seeking a consensual resolution between Baha Mar, China State Construction and The Export-Import Bank of China continues to take place in Beijing today - even as the Prime Minister implemented this unnecessary action.”
The Prime Minister does not help his cause by clearly taking sides with Ex-Im Bank and China Construction, praising “their willingness to work with government in their common objective of opening the project”, making no mention of any willingness by Baha Mar. Many Bahamians are disturbed by this obvious partiality to the Chinese, and actively hostile to the possibility of any large tract of property falling under Chinese control.
Nor is his cause helped by outbursts of personal attack on Sarkis Izmirlian. He probably regrets his intemperate spasm about Izmirlian’s state of mind, and wishes he could gag his maverick cabinet colleague, Fred Mitchell, and washed-up politician, Loftus Roker, for their hints that Izmirlian should be deported. In the modern Bahamas, that nearly extinct kind of reaction with racist over-tones is foreign to Christie and should be given the final death knell.
Today, all eyes will be focused on events in the Supreme Court. The government’s motion, the Prime Minister insists, “is not just a matter of national sovereignty. There should be a Bahamian solution to this Bahamian issue.” But is it strictly a Bahamian issue? The creditors are both Bahamian and American, possibly some European, and by far the largest being the Chinese bank and contractor.
I see an international issue. The solution can still be “Bahamian” under well-accepted rules, whereby a Bahamian court must supervise a Chapter 11 procedure. Exaggerated chauvinism should not rule the day. Our citizens now rely hourly on iPhones invented in the United States, and our engineers thrive on the experience of studying the US technology. Why should our lawyers not thrive from the experience of practicing a US-invented legal procedure?
Lawyers are experts at resolving seemingly intractable disputes with workable compromises. I hope that may happen today, with the essence of American Chapter 11 being clothed in a distinctly Bahamian costume.
• Richard Coulson is a retired lawyer and investment banker resident in the Bahamas. He is a financial consultant and author of A Corkscrew Life - adventures of a travelling financier.