The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Representatives for Sarkis Izmirlian yesterday expressed concern that Baha Mar’s receivers were under such pressure that they might “undervalue” the project in any sale, and “abandon” potential assets.

Whitney Thier, secretary for Mr Izmirlian’s Granite Ventures vehicle, alleged in a July 21, 2016, affidavit that media and government pressure, and the threatened downgrade to the Bahamas’ sovereign credit rating, might impair the Deloitte & Touche team’s judgment.

“Granite is concerned that the continued public pressure to open the Baha Mar resort that this [media] publicity itself creates, as well as the social and economic impact of a resulting credit rating downgrade, will increase the likelihood of the receiver-managers disposing at an undervalue or simply abandoning the assets of Baha Mar,” Ms Thier alleged.

Such assets, she added, included the $192 million claim brought against the parent of Baha Mar’s contractor, China State Construction Engineering Corporation (CSCEC), to enforce its 2011 work completion guarantee.

And Ms Thier further claimed: “Specifically, a concern is the compromising by the receiver/managers of the Baha Mar [$192 million] claim so as to expedite the restart of construction necessary for the opening.”

The receivers, who act for Baha Mar’s secured creditor, the China Export-Import Bank, are unlikely to take action against CSCEC and its China Construction America (CCA) subsidiary, given that it would undermine talks between all sides aimed at completing Baha Mar’ physical construction.

And given that all the Chinese entities have the same owner, the Beijing government, they are unlikely to take legal action against each other.

Mr Izmirlian’s and Granite Ventures’ latest legal manoeuvre is seeking Supreme Court permission for the latter to replace the National Insurance Board (NIB) as the entity petitioning to wind-up Baha Mar.

They also want to “accelerate” Baha Mar’s move into full liquidation, from its current provisional liquidation status, with the appointment of two Ernst & Young accountants as liquidators.

And, tied to this, Mr Izmirlian and Granite Ventures also want to bring forward the next winding-up petition hearing that is scheduled for September 30, 2016, arguing that this is likely to be adjourned yet again.

Explaining why full liquidation “would offer increased protection to Baha Mar’s unsecured creditors”, Ms Thier alleged: “First, liquidators would be in a far better position that the receiver/managers to increase Baha Mar’s pool of assets by investigating and pursuing the claims available to it.”

Ms Thier said Deloitte & Touche had “given no indication” they would pursue the legal claims against Baha Mar’s Chinese partners, and added: “This may be a consequence of sensitivities arising from the basis of their appointment - as appointees of China Export-Import Bank acting on China Export-Import Bank’s behalf.

“Liquidators would be subject to no such sensitivities, and could scrutinise fully the various assumptions of debt by Baha Mar.”

Ms Thier added that full liquidators would act as “a check” on the receivers’ activities, and said: “They may, for example, be minded to ensure that the receiver/managers take steps to obtain the best possible price for any assets sold or compromised.”

Granite Ventures, in a statement issued yesterday, said the provisional liquidation had been “inappropriately prolonged”, and failed to provide any transparency or standing for unsecured Bahamian creditors as to what was happening to resolve their claims.

It argued, on Mr Izmirlian’s behalf, that the process had only served Chinese interests, and added: “The Government of the Bahamas, acting in concert with these Chinese entities as it courts economic benefits from China, first pushed Baha Mar into the provisional liquidation process, and subsequently has resisted alternative approaches that would have placed Baha Mar on a sound financial footing.

“The result is that all parties who have had an economic interest in Baha Mar have been subject to the all-too-secret agenda of China Export-Import Bank and CSCEC, the only parties to seemingly have protection under Baha Mar’s provisional liquidation.”

Granite Ventures continued: “Precious time has been wasted, and the asset of Baha Mar can only have dissipated, a captive of the provisional liquidation and the machinations of China Export-Import Bank.

“In the inordinately long provisional liquidation, a time period well beyond what provisional liquidations are meant to cover,unsecured creditors, including hundreds of Bahamian companies, remain unpaid and with no visibility into either the likelihood or the timing of any repayment of debts owed.”

Mr Izmirlian’s company also slammed the “complete ineffectiveness and indifference” of the joint provisional liquidators, Bahamian accountant Ed Rahming, and the UK duo of Alastair Beveridge and Nicholas Cropper, in protecting unsecured creditors and pursuing potential recoveries for their benefit.

“The joint provisional liquidators have been given little authority and no funding, resigning them to figurehead positions rather than enabling the best resolution of the current situation,” Granite Ventures added.

“Under the Granite filing, we are proposing the appointment of permanent liquidators, who would have a seat at the table to ensure that the value of the Baha Mar assets is maximised.”