BAHA MAR STATEMENT
“The ruling by the Supreme Court of The Bahamas - appointing a provisional liquidator with limited authority and scheduling the winding up petition two months from now - provides Baha Mar with further time to move forward with its efforts to resolve issues so that it can complete construction properly and open successfully as soon as possible.
“Today has been an important day for Baha Mar - one that gives us further confidence that we will succeed in our efforts. We are pleased that, in making its ruling, the Bahamian Supreme Court has made it quite clear that the present intention is to not have Baha Mar liquidated or its management replaced. In fact, the judge specifically wants to make sure that Baha Mar’s assets are preserved - which is a priority we all share.
“We are confident that Baha Mar will succeed and that the provisional liquidator will not only confirm that Baha Mar is not wasting assets but, that Baha Mar has designed the most expeditious path to move forward with the completion of the project, as Baha Mar has contended all along.
“With the distraction of this proceeding behind it, Baha Mar and its counterparties can focus on the tasks at hand, free form the uncertainty that the petition had caused.
“Baha Mar is 97% complete. The Chapter 11 process is underway. Baha Mar has developed a plan of reorganization under the Chapter 11 process. This plan is now before the US Court. The plan is the best alternative. It is designed to enable Baha Mar to have a sound financial structure and to put Baha Mar in a position from which it can move forward to be completed properly and open. The plan effectively addresses Baha Mar’s creditor obligations, including paying in full all valid claims of Bahamian creditors and the Government of The Bahamas.
“We expect the provisional liquidator to work alongside us for the best interests of Baha Mar and The Bahamas.”
By LAMECH JOHNSON
Tribune Staff Reporter
JUSTICE Ian Winder said on Friday that his approval of the government's petition for the appointment of provisional liquidators for the stalled Baha Mar resort development was limited to preventing the depletion of the $3.5 billion resort's assets.
His approval of KRyS Global and AlixPartner Services UK came at the end of a full six-hour hearing which included the near 90 minutes it took him to read his written ruling into the record concerning the three days of proceedings last month.
The written ruling, he said, will not be available until Monday due to the need to make clarifications to the document.
Justice Winder adjourned the continuation of the proceedings (the winding up petition) to November 2 to allow the parties time to make the necessary plans to reach a solution and/or applications to himself or the Court of Appeal concerning his rulings in this matter.
Though he did not accept the government’s ground that the petition should be granted in the interest of the public, Justice Winder determined that government had made a sufficient case, in law, for the appointment of provisional liquidators as the development, “on the evidence” is “undoubtedly insolvent”.
The judge did note in his conclusion, however, that “it is extremely regrettable that the parties have not found a way to resolve this issue given what is at stake for all parties and the numerous opportunities afforded for a resolution.”
Justice Winder had approved Baha Mar’s strike out application concerning the government’s original petition filed on July 16 by the Attorney General and dubbed it to be “grossly irregular”, adding that it was not compliant with the Companies Liquidation Rules of the Bahamas.
The subsequent petitions filed on behalf of government entities including the Treasury and Bahamas Electricity Corporation were allowed, as the petitioners “at the very least show private interests in the development”.
However, Justice Winder determined that the Water and Sewerage Corporation and the National Insurance Board could not be counted as creditors as they were not listed under the Head of Agreements signed between the government and Baha Mar.
“The Gaming Board, too, is not a party to the Heads of Agreement,” the judge said. However, he noted that he would give the board 14 days to submit further evidence proving its standing as a creditor.
The government is seeking to wind up Baha Mar Ltd, Baha Mar Land Holdings Ltd, Baha Mar Properties Ltd, BMP3 (Wyndham Hotel) Ltd, BMP Golf Ltd, Cable Beach Resorts Ltd and Baha Mar Enterprises Ltd.
In a statement, Baha Mar said it was pleased that, in making its ruling, the Supreme Court had made "it clear that the present intention is to not have Baha Mar liquidated or its management replaced. In fact, the judge specifically wants to make sure that Baha Mar’s assets are preserved - which is a priority we all share".
The resort said that with “the distraction of this proceeding behind it, Baha Mar and it counter parties can focus on the tasks at hand, free form the uncertainty that the petition had caused.”
On June 29, Baha Mar and 14 of its affiliated companies filed for bankruptcy in a Delaware court, blaming the resort’s contractor, China Construction America (CCA), for the construction delays that caused it to miss previous opening deadlines.
The resort also took legal action against CCA’s parent company China State Construction Engineering Corporation in the English High Court.
On July 1, US Judge Kevin Carey approved the resort’s request to begin tapping into $80m in financing to keep the resort on track for opening while it undergoes Chapter 11 bankruptcy proceedings in that state. However, the Delaware judge’s approval of the debtor in possession financing request was conditional on the approval of the Bahamas’ Supreme Court.
Justice Winder, who presided over Baha Mar’s application for the foreign court’s ruling to take effect, dismissed that request.
Peter Knox, QC, and Loren Klein appeared for the government in these proceedings. James Corbett and Maurice Glinton, both QCs, represented Baha Mar.