By NEIL HARTNELL
Tribune Business Editor
and NATARIO McKENZIE
Tribune Business Reporter
Baha Mar’s receivers have shortlisted two groups, one with a Bahamian investor connection, as potential ‘preferred bidders’ for the $3.5 billion development, the Prime Minister said yesterday.
Perry Christie, in closing the 2016-2017 Budget debate, said the China Export-Bank, Baha Mar’s $2.5 billion secured creditor, had yet to select either of those recommended by Deloitte & Touche as the ‘preferred bidder’ for the property.
Referring to the ‘investment incentives’ that the Chinese are said to have demanded from the Government, Mr Christie said: “The Opposition has raised the question regarding concessions which the Government is being asked to consider in relation to the completion of the Baha Mar project.
“This is a matter which will require negotiations, primarily with the new investor in this project, who is yet to be decided upon by the China Export-Import Bank.
“The current position, as I understand it, is that two firms have been shortlisted. One of them has a Bahamian investor connection.”
Mr Christie did not identify the two groups or the ‘Bahamian investor connection’, adding that he had asked the China Export-Import Bank and its receivers to “separate” Baha Mar’s construction completion from the task of finding a purchaser.
He said the Deloitte & Touche receivers were currently in Beijing, meeting with the China Export-Import Bank (EXIM) and China State Construction Engineering Company (CSCEC) to hammer out an agreement for construction remobilisation.
“The EXIM Bank, the receiver-managers and the construction company are currently in Beijing; as we speak they are currently in Beijing,” Mr Christie told the House of Assembly.
“The Government of the Bahamas is not a party to those talks. We can observe, but we are not a party to those talks. Those talks are now taking place, Mr [Raymond] Winder leading a team as the receiver-manager in Beijing, with the construction company and the leadership of the bank, and they are discussing and negotiating a construction contract in order to remobilise and complete the project as soon as possible.”
Mr Christie announced last month that the Government and two Chinese entities had entered into a “framework agreement” to complete the stalled Baha Mar resort “as expeditiously as possible”.
Mr Christie yesterday again defended his administration’s role in the Baha Mar saga, saying he did whatever he could to facilitate the involvement of Baha Mar’s original developer, Sarkis Izmirlian.
He yesterday sought to destroy what he called “the myth” that his administration had exercised poor judgement in opposing the original developer’s Chapter 11 bankruptcy filing in a Delaware court.
To do this, he released two separate memorandums, dated June 20, 2016, from the Government’s US and UK attorneys, which said it would have been “a perverse outcome” for a Delaware court to determine the fate of a $3.5 billion Bahamas-based investment project.
Charles Russell Speechlys, the UK legal advisers, justifying the Government’s decision to oppose Mr Izmirlian’s Chapter 11 bankruptcy protection filing, said it was “a fundamental tenet” of cross-border insolvency law that winding-ups and receiverships be administered by courts in the same country as the subject company or assets.
“Had [Chapter 11] recognition been granted, the Bahamian court would have been such a ‘foreign court’ - a perverse outcome,” Charles Russell Speechlys said, as the Delaware Federal Bankruptcy Court would then have become the primary forum determining Baha Mar’s fate.
“One of the reasons the Government of the Bahamas resisted the recognition of the Chapter 11 was because were it to do so, it would have been tantamount to Government of the Bahamas accepting that the Delaware court had primacy over the Bahamian court in this matter, and the Bahamian court’s role and jurisdiction in this matter would have been limited to assisting the Delaware court in its supervision of the Chapter 11 process. The Government of the Bahamas was strongly advised that it should not allow this to happen.”
Charles Russell Speechly added that the Government could not be bound by the Chapter 11 process itself without consenting to this. Yet all the unsecured Bahamian creditors would have been bound.
“It would arguably have been untenable for the Government of the Bahamas to advocate the recognition of a process that allowed a debtor to ‘cram down’ the interests of Bahamian creditors, whilst Government of the Bahamas would have to be made whole in the process,’” the UK law firm argued.
Hogan Lovells, the Government’s US attorneys, said the Chapter 11 filings had given Mr Izmirlian “short-term tactical benefits - at a steep price”.
The consequences of letting the Chapter 11 process proceed, it argued, would have been Baha Mar deciding what contracts to retain or discard, leaving all unsecured creditors without any security.
Hogan Lovells added that Mr Izmirlian subjected Baha Mar’s assets “to the exorbitant fees payable as administrative expenses” to attorneys and advisers in the Chapter 11 process.
These fees became priority payments over unsecured creditors, and totalled more than $6.3 million.
“Had the Chapter 11 cases continued, the attorneys’ fees would have increased dramatically, and the Baha Mar debtors also would have been expected to pay investment bankers’ fees of $150,000 per month, plus additional fees based on milestones, subject to a cap of $14 million,” Hogan Lovells added.