By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
A prominent businessman yesterday urged Sarkis Izmirlian to “carefully reconsider his options” for resolving the $3.5 billion Baha Mar dispute, describing as “great” a US judge’s decision to dismiss the developer’s Chapter 11 bankruptcy protection case.
Franklyn Wilson, the Arawak Homes chairman, told Tribune Business that the Delaware Bankruptcy Court’s verdict had “simplified life for all of us” by eliminating the competition with the Bahamas as to which was the primary jurisdiction for resolving the Baha Mar dispute.
Mr Wilson, who in Monday’s newspaper had suggested that yesterday’s decision would be critical to a speedy resolution of the impasse, said: “I think this is a very significant development in this particular case, and it really is great that these jurisdictional issues can be resolved in this manner.
“Everyone’s had their day in court, but the end result is very significant for the Bahamas. I trust that the effect of it is that it will spur the parties to talk again.”
He continued: “I trust this will also spur the parties to get back together, as it certainly gives Mr Izmirlian cause to reconsider his options.
“All things considered, he may want to think carefully about what’s the next best thing to do. He’s got until November 2, so there’s a lot of time to think about it.”
Judge Kevin Carey’s move to eliminate the Chapter 11 bankruptcy protection for Baha Mar’s 14 Bahamian companies effectively eliminates the last ‘cover’ Mr Izmirlian enjoyed against measures that could be employed by the Government and his Chinese ‘partners’.
The verdict leaves the Supreme Court, and its provisional liquidators, in complete control at Baha Mar, and free and clear to preserve both the $3.5 billion project’s assets and bring the warring factions together to see if a commercial settlement is possible.
And, with the Izmirlian family’s $850-$900 million equity investment exposed to complete loss via the November 2 winding-up petition hearing, Baha Mar’s principal now faces being further backed into the corner by the Government and China Export-Import Bank, his financier, and China Construction America (CCA).
Now in a position of relative weakness, rather than strength, Mr Izmirlian will be unable to ditch CCA as the project’s general contractor - a key objective if the Chapter 11 cases had been allowed to continue.
And he will likely face Chinese demands to put up the $175 million guarantee (later dropped to $100 million) in return for the China Export-Import Bank providing $200 million in additional financing to complete construction and get Baha Mar opened.
Observers were divided on how quickly any Baha Mar resolution could be achieved in the wake of yesterday’s ruling. Some suggested the resort could be completed and opened within six to eight months, while others said it would take over a year due to Baha Mar’s likely legal appeals and counter-appeals.
It is also unclear whether the end to Chapter 11 bankruptcy protection for Baha Mar’s 14 Bahamian companies will pave the way for the Rosewood hotel brand to withdraw from the project, as it is seeking permission to do, or if the supplier of $13 million worth of gaming equipment, PDS Gaming, will be allowed to repossess this.
Should such events happen, it will likely take years to rebuild the Baha Mar project, especially if the current management team is displaced.
Still, Mr Wilson added of yesterday’s ruling: “The fact the judge has done this simplifies life for all of us.”
He told Tribune Business that he had received several phone calls from bankers and businessmen agreeing with his warning that a successful Chapter 11 reorganisation by Baha Mar could spark a ‘credit crunch’ for Bahamian companies and developments.
He had previously warned this newspaper that international lenders may refuse to extend credit to such borrowers due to uncertainty over whether they would be able to enforce/collect on Bahamas-based security for those funds.
Mr Wilson argued that these were implications resulting from Baha Mar’s Chapter 11 bankruptcy protection filing that the Bahamian business community needed to be “mindful” of, given that access to credit was “fundamental to our economy”.
Were Baha Mar’s Chapter 11 reorganisation to succeed, the Sunshine Holdings chairman had said it would set a dangerous precedent whereby Bahamian-domiciled creditors could rush to the US and follow the same procedures in a bid to shake-off local creditors - including lenders with locally-registered security over their assets.
And lenders with US assets would be prevented from moving on any Bahamian security they have, as doing so would leave them in contempt of the bankruptcy court and expose their financial and property assets to seizure.
“Bankers offered their view that this was a significant point and very relevant point, and said at this time, when there are a number of banks looking very closely at the Bahamas, we can’t take anything for granted,” Mr Wilson told Tribune Business yesterday.
Comments
newcitizen 8 years, 7 months ago
Neil, can you stop trying to get quote from Frankie Wilson. The guy is biased and factually incorrect about everything he says, and he is a snake of a businessman. Can you not find one respectable person to ask about business affairs besides Frankie? There has to be at least one, actually upstanding, person who you could call instead.
asiseeit 8 years, 7 months ago
The reporters in this country on the whole are on the political dole and suck donkey balls. You think they could do some investigative reporting, come up with some real juice? This is why people turn to Bahamasnewsmyboy and others along those lines. The reporters from the Tribune and Guardian report on the low hanging fruit, not the real juicy stories that are just sitting there stewing. You think with all the blatant nefarious dealings in this country they could dig anything up..........NOPE!
Well_mudda_take_sic 8 years, 7 months ago
Christie and the likes of Wilson aka Snake have every reason to be happy. At the end of the day the Chinese, on a net basis, have no more invested in Baha Mar than the Izmirlian family, perhaps the equivalent of USD 1 billion at most. Monies from the credit facilities extended by China EXIM Bank went into the pockets of the Chinese construction company, the Chinese sub-contractors and all of their Chinese workers involved with the project. The conflict of interest in having Chinese financing married with Chinese construction/labour all but assured profits for the China state controlled enterprises would be padded as much as possible by the cutting of corners at the work site, which no doubt has resulted in hidden poor quality workmanship throughout the project that will cost hundreds of millions of dollars to fix. A full blown costly investigation by non-Chinese engineers would need to be done to reveal all of the serious shortcomings in the quality of the Chinese workmanship that has no doubt left the project's structures unsafe in many respects. The Chinese obviously put monies in other non-Chinese Bahamian pockets (and I'm not just talking about local Bahamian contractors!) in order to bring things to the failed state where they are today, leaving many poor Bahamians and Bahamian taxpayers left holding the proverbial empty bag. It's all about seeing the bigger picture.......a massive screwing of the Bahamian people by the Chinese crawling into bed with our greedy corrupt dimwitted politicians (in the same way they have done throughout much of Africa....starting with a stadium)......and we Bahamians all know the ones at the top of that very greedy list of self anointed political elite in our country who could not care less about the Bahamians who foolishly voted them into office!
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