The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Attorney General yesterday suggested the three-week delay to Baha Mar’s winding-up hearing was intended to give all parties more time to reach a “hoped for” commercial resolution to the $3.5 billion dispute.

Allyson Maynard-Gibson told Tribune Business that by November 25 the impasse should be “nearer to resolution, if not resolved”, indicating the Government was holding-off on moving to full liquidation to provide all sides with the necessary time.

She was speaking after the Attorney General’s Office, acting on behalf of the Water & Sewerage Corporation, Treasurer, Gaming Board and National Insurance Board (NIB), petitioned the Supreme Court to push the Baha Mar ‘winding-up’ hearing back 23 days from November 2.

Tribune Business was told that all sides were waiting to receive a signed, perfected copy of the Order changing the hearing dates from Justice Ian Winder late yesterday afternoon.

Mrs Maynard-Gibson, confirming the move by the Attorney General’s Office, said she was unaware of the outcome because she had been in the Senate all day.

However, she told Tribune Business: “We are hoping that by the time that the date - some time at the end of the month - occurs, that there will be some resolution. That will be nearer to resolution, if not resolved.”

Mrs Maynard-Gibson said all parties to the dispute, including Sarkis Izmirlian as developer and the Chinese, were continuing to talk in the hope of reaching an out-of-court settlement.

When asked whether the application for the three-week extension was merely a ‘stalling tactic’ and the Christie administration ‘playing for time’, Mrs Maynard-Gibson replied: “We continue to speak and maintain the optimism that the Prime Minister spoke about.”

To justify the delay, the Government has sought the Supreme Court’s permission to amend its winding-up petitions to reflect an increase in the sums owed to the Government agencies by Baha Mar since the actions were first filed.

The $3.5 billion project was said to owe the Government agencies a collective $58 million back in July, but the amendments have to be advertised within seven days of their implementation - a timeline that would extend beyond the November 2 date.

Tribune Business reported on Friday that it was questionable whether the Government would move ahead with the November 2 hearing, as it had not complied with the statutory provisions of the Winding-Up Act amendment 2011.

It, like all winding-up petitioners, has to advertise the filing of its petition within 14 days of doing so, so other creditors and the subject company are alerted and can respond.

Yet one contact with experience of liquidation processes said the Government had failed to do this, and suggested that it may use this to ‘play for time’ on November 2 and avoid initiating the Baha Mar liquidation petition just yet.

Prime Minister Perry Christie had also hinted that the Government may be having ‘second thoughts’ over the liquidation strategy, as he described the November 2 deadline as a “chilling prospect”.

Mr Christie often speaks in riddles and is hard to de-code, but his remarks could be interpreted either as a re-think or call to the three parties - developer Sarkis Izmirlian, the China Export-Import Bank and China Construction (America) - to resolve their differences quickly.

Meanwhile, Tribune Business sources close to developments yesterday confirmed that the joint provisional liquidators had developed a resolution proposal that was being assessed by all parties.

“The joint provisional liquidators have put forward a proposal that is being considered by all sides. Hopefully, that will resolve this current impasse,” one source intimately familiar with developments revealed.

No details on the proposal by the team of Ed Rahming, the Bahamian accountant and partner in KRyS Global (Bahamas), and UK duo, Alastair Beveridge and Nick Cropper, of Alix Partners, were forthcoming.

However, Tribune Business contacts told this newspaper that the joint provisional liquidators had successfully to-date resisted pressure from both the Government and China Export-Import Bank over how they should perform their task, and were demonstrating their independence as ‘officers of the Supreme Court’.

“There’s been some jockeying back and forth,” one source revealed. “As officers of the court, it’s a tough position. Sometimes the bank wants you to do things their way, and sometimes the Government wants you to do things their way, but you have to be independent.

“That’s what they’re doing. These are experienced guys, and they take that mandate seriously. This one wants you to go this way, you have to do your best and make judgments as officers of the court, and be fair and impartial.”

They described suggestions that the China Export-Import Bank was unhappy with the joint provisional liquidators as an assessment that was “much, much too high”.

“The bank just wanted to ensure they were working to preserve the asset and ensure the judicious use of the remaining funds,” another source close to Baha Mar developments said, on condition of anonymity.

“The execution and judicious use of funds was paramount to them.” Tribune Business understands that the joint provisional liquidators have spent around $3 million to-date.

The Government’s seeming optimism that a resolution is near contrasts with the content and tone of Mr Izmirlian’s message to former staff in the wake of the Supreme Court authorising the termination of 2,026 workers last Thursday.

That, of course, could be because Mr Izmirlian has no future role as Baha Mar’s owner and developer.

The likeliest scenario is that Baha Mar ends up in full liquidation, or the China Export-Import Bank appoints its own receiver for the project. It is entitled to do this as the $2.5 billion secured creditor.

It will then work with China Construction (America) to complete construction, and find the necessary $600 million financing to get Baha Mar open. In short, the Chinese will take over the ownership.

The Chinese will then bring in hotel brands, and management/operating partners, to run Baha Mar (or whatever it is called) while they work out whether to hold or sell it - possibly breaking it up into different parts.

Any sale of Baha Mar as it currently exists will only net the China Export-Import Bank $0.50-$0.60 of every $1 invested, meaning it will not recover its $2.5 billion outlay.

Then there is the question of whether the Government can persuade the Chinese to pay the $74 million owed to Bahamian contractors, and the contracts of the Bahamian retail and restaurant tenants, which will likely be ‘null and void’.

Several contacts have suggested that even if the Chinese come to a speedy deal to complete and open Baha Mar, construction defects and Building Code issues will mean that the earliest the development can open is December 2016.