The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Baha Mar’s joint provisional liquidators yesterday pledged that salaries and benefits due to the Melia Nassau Beach Hotel’s 1,000 staff would not be disrupted, even though the resort’s owner is one of the Baha Mar companies now under Supreme Court supervision.

Bahamian accountant Ed Rahming, and his UK partners, Nick Cropper and Alastair Beveridge, said it was their “intention” that the provisional liquidation would not impact the Melia’s daily operations, given that the resort is effectively the only operating asset they have inherited.

The trio’s message was designed to reassure Melia staff, given that the property’s holding company, Cable Beach Resorts Ltd, is one the seven Baha Mar companies that have been placed in their care by the Supreme Court.

“Cable Beach Resorts Ltd, one of the companies in provisional liquidation, is the employer of those employees working at Meliá Nassau Beach Hotel,” the accountant trio wrote.

“The provisional liquidators have met with the general manager and members of his team in order to explain the role of the provisional liquidators, and to obtain an understanding of the current operations.

“It is the provisional liquidators’ intention that the provisional liquidation process will not impact on the day-to-day operations at Meliá Nassau Beach Hotel, with employees at the Meliá Nassau Beach Hotel continuing to be paid their salary and benefits in the ordinary course of business.”

That is likely to come as temporary relief, at least, to Melia’s staff given the uncertainty surrounding the overall fate of Baha Mar and the adjacent $3.5 billion development.

The joint provisional liquidators will rely on Melia to be self-sustaining, and generate enough cash flow to cover its operational costs, while they turn their attention to the much bigger headaches they have.

However, Tom Dunlap, Baha Mar’s president, revealed earlier this year that the Melia Nassau Beach Hotel can “barely” generate enough cash flow to finance its own operations.

“It is not self-sustaining in a robust enough fashion that it could throw off excess cash,” Mr Dunlap said, in response to questions from attorneys representing Baha Mar’s contractor during the Chapter 11 proceedings in Delaware.

The Melia will likely be relatively low on the joint provisional liquidators’ priorities, their main one being to find the financing necessary to meet the $5 million-plus September payroll due Baha Mar’s Bahamian employees.

Sarkis Izmirlian, Baha Mar’s chairman and chief executive, who has now been removed from control over Baha Mar, said in his Friday message to staff that the joint provisional liquidators were working to secure the balance left on the $21 million owed to the developer for the West Bay Street re-routing and associated infrastructure.

Enough is likely left for one more Baha Mar payroll, which means that come October the joint provisional liquidators - likely without any cash flow or hotel operations to support them - may have to make some hard decisions on whether to retain some 2,400 employees.

Mr Rahming and the UK duo yesterday branded the “support and cooperation” of Baha Mar’s employees as “critical” in their efforts to maintain the $3.5 billion project, and attempt to mediate a resolution between Mr Izmirlian and his Chinese partners to secure is construction completion and opening in the shortest time possible.

“One of the provisional liquidators’ immediate priorities is to gather the information necessary in order to assess the companies’ current financial position and to evaluate the most appropriate way forward,” the trio said.

“This is a complex situation and the provisional liquidators are working extremely hard in order to complete this assessment as soon as possible, so as to be in a position to provide more information to employees of the companies on their positions, wages and benefits.

“In the interim, the provisional liquidators ask for your patience whilst they work to complete this assessment, after which they anticipate being able to provide a further update to employees on their progress later this week.”

They acknowledged that “this is a difficult time” for all Baha Mar staff.

Meanwhile, the joint provisional liquidators also yesterday withdrew the appeal launched by Baha Mar against Justice Ian Winder’s decision to refuse to recognise the Chapter 11 proceedings in the Bahamas, which would have given the Delaware court’s Orders legal effect in the Bahamas.

Documents seen by Tribune Business show that Supreme Court Justice Bernard Turner gave leave for the appeal to be withdrawn.

With the dismissal of the Chapter 11 cases, the appeal had likely been rendered moot and of no consequence. And with little to no funding, the joint provisional liquidators likely decided to conserve their scarce cash resources.

Alfred Sears QC, the former attorney general, and his Sears & Co law firm, are acting for the joint provisional liquidators.