The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The $3.5 billion Baha Mar dispute is “not so far gone” that professional arbitration will be unable to resolve it, the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) chief executive yesterday arguing that such intervention was becoming more urgent by the day.

Reiterating the Chamber’s preferred approach for resolving the dispute, Edison Sumner urged all parties to “get their ducks in a row” and negotiate a commercial settlement for the good of the Bahamian people and local businesses.

He warned that striking such a deal in the two-month window permitted by the Supreme Court was imperative, given that the scheduled November 2 hearing on the Government’s winding-up petition will “not be in anyone’s favour - especially the developer’s”.

And Mr Sumner called on the newly-appointed provisional joint liquidators for Baha Mar to do everything in their power to ensure small and medium-sized Bahamian businesses, who had taken on debt financing to secure contracts at the $3.5 billion project, were “properly compensated”.

Asked whether the Chamber believed a mediation and/or arbitration process, overseen by skilled and experienced international professionals, could aid a Baha Mar resolution following Justice Ian Winder’s ruling, Mr Sumner responded: “Absolutely we do.

“We feel there’s still an opportunity for all parties concerned to take their disputes to mediation, or they should consider arbitration for those matters that can be arbitrated.

“We would have seen from the admonition from the US judge and Justice Winder that time is up at the next court date. They have given them time to have discussions and find ways to resolve the outstanding issues before then.”

The Chamber has been steadfast in urging all parties to the dispute - Baha Mar (the Izmirlian family); the China Export-Import Bank; China Construction America; and the Government - to use a professionally-supervised arbitration process to resolve the dispute, and agree financing and a timetable for the project’s completion.

The BCCEC chief executive added that the International Chamber of Commerce (ICC) and the International Court of Arbitration (ICA), who are affiliated, remained “willing to assist” should all parties agree on going to mediation/arbitration.

“This should be a matter that can be taken through the process of mediation and, if warranted, arbitration,” Mr Sumner told Tribune Business.

“At this point, I believe a negotiated settlement between the parties is still more advantageous than the litigation process going through the court.

“If all parties agree to get this resolved, it’s not too far gone to use arbitration.... If they are unable to reach some resolution between now and the next court date, I believe the next court ruling will not in anyone’s favour,” he added.

“It’s incumbent on them all to get their ducks in a row and resolve all their differences before then.”

Mr Sumner’s comments about the “next court ruling” allude to the fact that Justice Ian Winder, having appointed the joint provisional liquidators on the grounds the six Baha Mar companies are insolvent, will probably agree to the BEC and Treasurer’s winding-up petitions.

A liquidation of those Baha Mar companies will likely only further prolong the project’s construction completion and opening, at least in comparison to a negotiated settlement. And Bahamians will have to wait longer for the promised 5,000 jobs, while local contractors, vendors and retail/restaurant tenants will also endure further months before either being compensated for work done or receiving a return on their investments.

Justice Winder made it abundantly clear in his ruling that the joint provisional liquidators, Bahamian accountant Ed Rahming, a partner in KRyS Global (Bahamas), and two UK accountants, Mark Cropper and Alastair Beveridge of AlixPartners Services, are to engage in negotiations with all parties to the dispute in a bid to achieve a commercial resolution.

“I will permit the promotion of a scheme of arrangement and/or compromise with all stakeholders (contributories and creditors),” Justice Winder said.

“I am satisfied that the facts of this case warrant the empowering of provisional liquidators to promote a scheme/plan of compromise between all stakeholders which could result in the reversal of the company’s insolvent status. Such a solution would surely result in the prevention of the dissipation of the assets of [Baha Mar].”

Agreeing that this was ‘in tune’ with what the Chamber had been recommending from day one, Mr Sumner said of the dispute: “They should have gone into meaningful mediation/arbitration at once.

“It’s even more recommended now. They have seven to eight weeks to resolve their differences otherwise the ruling from Justice Winder will be more severe, and it’s not going to augur well, particularly for the developer.

“We know the provisional liquidators appointed by the court. Hopefully, they will use their powers to take this through arbitration. Hopefully, through the role they’re playing, they can pull the parties together to resolve these outstanding issues so we can all move forward.”

Mr Sumner added that if all sides had the Bahamas’ “best interests at heart”, they would reach a commercial settlement to complete and open Baha Mar in the shortest possible time.

And he reiterated that it was “incumbent” on the joint professional liquidators, as well as Baha Mar, the Chinese and the Government, to ensure Bahamian creditors were “properly compensated”.

Mr Sumner said the Chamber had been contacted by numerous small businesses that had borrowed money to finance winning bids on supply and construction contracts at Baha Mar, only to be left ‘out-of-pocket’ by the dispute.

Lenders were calling for repayment, and many were “unable to pursue other large contracts” due to the debts they were owed.

“They should be given priority consideration, so they can recover outstanding receivables and be in a position to be bidding on other contracts,” Mr Sumner told Tribune Business.