By RASHAD ROLLE
Tribune Staff Reporter
rrolle@tribunemedia.net
CHINA Construction America (CCA) called for an American judge to dismiss Baha Mar’s Chapter 11 case in a motion filed in a Delaware bankruptcy court yesterday, claiming Baha Mar was not qualified to take such action under the US bankruptcy code and did so in bad faith to gain bargaining power during negotiations with relevant parties.
CCA argued that the winding-up petition filed by the Bahamas government in the Supreme Court last week would accomplish goals similar to that of the Chapter 11 procedure, but in a jurisdiction appropriate for the matter to be heard.
CCA frequently alluded to Prime Minister Perry Christie’s televised national address about Baha Mar in its motion, treating him as an authority on this country’s reliance on the development and consequent responsibility for hosting judicial proceedings concerning it. CCA attached Mr Christie’s entire address to the nation as an exhibit in their pleadings.
In a previous affidavit, Baha Mar President Tom Dunlap claimed that Baha Mar chose to initiate the Chapter 11 process because, unlike this country’s winding up process, Chapter 11 would not “destroy the value of the project it is intended to create.”
CCA disputed this, however, emphasising that under the winding up process, a provisional liquidator would be appointed to engage with stakeholders and creditors in an effort to restructure Baha Mar’s affairs and complete the resort in the shortest time possible.
CCA said: “The debtors’ only motivation for filing for bankruptcy protection in the United States was to retain control over the project as ‘debtors in possession,’ at the expense of their creditors and their own estates. In order to maintain their control, the debtors are attempting to use the US bankruptcy system to (1) avoid bankruptcy proceedings in The Bahamas, which would preclude them from retaining control because the Bahamian insolvency system generally allows for the displacement of the management and the appointment of a provisional liquidator to oversee either liquidation or reorganisation, and (2) use the US proceedings as a bargaining chip in contractual and other negotiations with the government of the Bahamas, CCA Bahamas and other creditors.”
CCA argued that under the US Bankruptcy Code, Baha Mar’s case should be dismissed because it does not belong in a US court and was filed in bad faith.
“Because the interests of the debtors and their creditors would be better served if the proceeding is conducted in the Bahamas, this court should abstain from hearing these Chapter 11 cases and dismiss the cases pursuant to section 305(a)(1) of the Bankruptcy Code,” CCA said, noting that in considering whether to dismiss a case under such grounds, a judge could consider whether the central dispute could be dealt with in another forum.
And as for why the motion should be dismissed on the grounds that it was made in bad faith, CCA argued that the Chapter 11 process merely offers Baha Mar a “tactical advantage” that would not be available in the Bahamas.
CCA said: “Despite the fact that nearly all—if not all—of the debtors’ property, assets, employees, and other interests are located in the Bahamas, the debtors have brought these cases in Delaware—where the debtors have not shown they own any property, any assets, employ any persons, or have any interests beyond a corporation that purports to ‘manage’ third-party companies.”
Baha Mar filed for Chapter 11 protection in the US on June 29.
The Supreme Court is expected to give a ruling this Wednesday on whether it will recognise Baha Mar’s bankruptcy filings in the US.
Comments
Well_mudda_take_sic 8 years, 9 months ago
WELL WORTH REPEATING: Our government never told Baha Mar and Sarkis Irzmirlian at the inception of the project, nor at any time before Baha Mar's Chapter 11 bankruptcy protection filing in Delaware and legal actions filed in the High Court in the UK, that Baha Mar would not be able to avail itself of laws in jurisdictions other than the Bahamas as a means of remedying major disputes that might arise during the development. If the agreements signed by Baha Mar with the Bahamian government and the Chinese enterprises concerned do not limit Baha Mar to seeking legal redress in the Bahamian courts for the claims relating to its grievances and its financial/liquidity needs attributable to those grievances, then the Christie-led PLP government is patently wrong in its application that Baha Mar be placed in liquidation by the Bahamian courts. Absent a limiting contractual undertaking, choosing the best jurisdiction for legal proceedings that must be initiated is a fundamental right of any private sector enterprise like Baha Mar. For the Bahamian government to now suggest, at this late stage of the development, that the project is a de facto public sector enterprise by virtue of being too large too fail, and therefore all legal proceedings relating to it must be brought before the Bahamian courts, is patently wrong and most harmful to the developer. As for the large sums currently owing by Baha Mar to the Bahamian government, the mere fact that the Bahamian government allowed these sums to become so large is prima facie evidence that the government was only too willing to extend significant sums of credit to Baha Mar to help out with the project's liquidity needs. In fact, it is generally well known that the Bahamian government has a well established history (rightly or wrongly) of extending very large amounts of credit to foreign developers. It is therefore a great travesty for the the Christie-led PLP government to now turn around and attempt in a most unjust way to pull the rug out from under Baha Mar. The behaviour of the Christie-led PLP government in this matter wreaks of vindictiveness and malicious intent, deviously masked by the pretense of concern for the sovereignty of the Bahamas. We can only hope that the impending ruling of Justice Winder will be seen as a most important step towards restoring the faith of the Bahamian people and the global community in the independence of our judicial system. We have a Constitution that expressly does not permit the "nationalisation" of privately owned assets by any means!
Bahamian_in_London 8 years, 9 months ago
Why would the contractor oppose this motion. They are not a secured creditor, China EXIM bank is. If the development is liquidated in the Bahamas as opposed to restructured under Chapter 11, there is almost no chance of any unsecured creditors getting anything.
If they were a true third party, there is no way they would oppose Chapter 11, as it allows the developer to put more money into the business but still have protection (as evidenced by the $70m investment that was approved by the US judge).
They are no doubt opposing this as they have been given assurances from the Christie Government that if the liquidation happens in Bahamas, they will be looked after.
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