The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Attorneys for China Construction America have filed court papers seeking permission to interrogate top Baha Mar executives on 24 separate issues relating to the developer’s Chapter 11 bankruptcy protection bid.

Documents seen by Tribune Business reveal that the contractor’s US attorneys want to depose Baha Mar executives on August 6, 2015, on events leading up to and after its Chapter filing on June 29.

In particular, China Construction America and its attorneys want to examine the developer’s top executives on “all facts, circumstances, discussions, plans” or strategies relating to its decisions to file for Chapter 11 AND not use restructuring procedures in the Bahamas.

The contractor also wants details on any planned or anticipated restructuring of the 15 Baha Mar companies that are the subject of litigation before both the Bahamian Supreme Court and the Delaware Bankruptcy Court.

Other topics that China Construction America and its attorneys are eager to discuss include Baha Mar’s plans to downsize its 2,593-strong workforce to a ‘skeleton’ 52 staff should there be no rapid resolution to the $3.5 billion project dispute.

They want to interview Baha Mar executives on “all facts, circumstances, discussions, plans, or strategies concerning the debtors’ plans to downsize and/or suspend operations, archive property, and reduce the workforce to minimally maintain Baha Mar resort assets”.

China Construction America also wants a better insight into suggestions made by Tom Dunlap, Baha Mar’s president, on June 29, 2015, that it would “explore avenues” other than itself and the China Export-Import Bank to finance, and finish, the resort’s construction.

The remainder of the contractor’s interview issues relate to tracing Baha Mar’s property, bank account and licence assets, both in the Bahamas and elsewhere.

The Delaware Bankruptcy Court has yet to approve China Construction America’s examination request, which will take place 11 days before it hears the contractor’s bid to dismiss the bankruptcy protection it has afforded Baha Mar.

The proposed August 6 examination date is also almost a week after the Government’s petition to wind-up the 14 Bahamian-domiciled Baha Mar companies will be heard on July 31.

Meanwhile, Magdalena Hamya, Baha Mar’s vice-president of human resources and organisational development, told the developer’s staff that executives were “continuing negotiations day and night” with the contractor and China Export-Import Bank in a bid to resolve their differences and complete the project.

She added that Baha Mar and its principal, Sarkis Izmirlian, were “steadfast” in believing that Chapter 11 was the best process for restructuring the project and ensuring it was completed - a view that the Government and its Chinese partners seem not to share.

“We are steadfast in our belief that this process is the best path for Baha Mar to be completed and successfully opened, and will continue to pursue it,” Ms Hamya said of Chapter 11.

“Simultaneously, we are continuing negotiations day and night to try to come to a resolution that will allow us to complete the project. We feel both of these avenues can bring Baha Mar to completion; our goal in pursuing both is to find the quickest possible route.”

She added that Baha Mar was uncertain about how Justice Ian Winder’s Wednesday ruling, in which he refused to recognise the Chapter 11 proceedings in the Bahamas and grant the developer other protections from its creditors, would impact the process in Delaware.

Ms Hamya, though, added that the creditor protections granted by the Delaware Bankruptcy Court would assume increased importance given Justice Winder’s verdict, especially given that they would deter the China Export-Import Bank from acting on the security for its $2.45 billion debt financing.

Tribune Business reported yesterday how none of the bank, China Construction America and even Cable Bahamas, all owners of US-based assets or business concerns, will risk violating a Delaware Court Order and expose themselves to ‘contempt of court’ related sanctions.

The China Export-Import Bank will likely be waiting for the Government’s Baha Mar winding-up petition to succeed, and the appointment of provisional liquidators for the 14 locally domiciled Baha Mar companies.

Once that happens, the provisional liquidators will likely move to withdraw the Chapter 11 action, paving the way for the bank to realise upon its secured loan.

“We do not believe today’s ruling, for which the Government strenuously argued, assures the necessary protection of the assets of Baha Mar, and we do not believe that it is best for the over 2,500 current employees of Baha Mar,” Ms Hamya said of Justice Winder’s verdict.

“We note that the stay granted by the US Bankruptcy Court remains in effect, and takes on increased importance in light of this ruling, as all parties must still address that prohibition on the exercise of remedies.

Ms Hamya indicated, though, that for the moment Baha Mar is not acting on plans to downsize its workforce to a ‘skeleton’ 52-strong staff, which it has threatened to do if there is no immediate resolution to the impasse.

“We are continuing to do everything we can through direct discussions with the relevant constituencies and stakeholders to ensure the survival of Baha Mar,” she added.

“We reiterate what we told the court. We are making progress toward reaching a consensual resolution. If all the parties are willing, this resolution can happen. For the sake of all concerned, not least our Baha Mar citizens, it must happen.

“In the meantime, you all continue to be the citizens of Baha Mar and this point and your employment status remain unchanged.”