The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Supreme Court yesterday adjourned until May 27 the bid by Baha Mar’s original developer to wrest control of the $192 million legal claim against the project’s contractor from the receivers.

Justice Ian Winder delayed the scheduled hearing of the petition by Sarkis Izmirlian’s Granite Ventures vehicle, which is seeking a Supreme Court Order requiring the Deloitte & Touche receivership team to ‘sell’ the litigation.

That came after Justice Winder adjourned the hearing of the Government’s winding-up petition against Baha Mar until September 30, just as Tribune Business had exclusively revealed on Thursday morning.

As reported by this newspaper, the petition by the likes of the National Insurance Board (NIB) and Gaming Board was delayed to allow time for the ongoing Baha Mar sales process to bear fruit.

Wayne Munroe QC, attorney for the government agencies, confirmed outside court that some 16 different groups had shown an interest in bidding on - and acquiring - Baha Mar.

The sales process is being run by Deloitte & Touche, and bidders have until Monday, May 9, to submit formal offers.

Mr Munroe suggested that a preferred bidder might be selected by end-June 2016, depending on whether the bids met the requirements set by Baha Mar’s secured creditor, the China Export-Import Bank.

Tribune Business understands that interest has been shown by groups with Bahamas connections, as well as Chinese/investors and Western-based consortiums.

The Government, meanwhile, appears to be ever-more eager that there be some concrete progress towards a Baha Mar resolution, which it can show to the Bahamian people with a general election one year away.

Prime Minister Perry Christie, in a television interview, said Attorney General Allyson Maynard-Gibson, and his senior policy adviser, Sir Baltron Bethel, had met with the Baha Mar receivers on Wednesday in a bid to encourage them to resume construction prior to securing a buyer.

The Government appears to have been counting on the Chinese to re-start construction, having referred to discussions between the China Export-Import Bank and China State Construction Engineering Corporation (CSCEC), parent of actual contractor, China Construction America (CCA), when the winding-up petition was last adjourned back in February.

These talks, though, have yet to bear fruit, and Mr Christie yesterday indicated he wanted to be able to announce a date for when Baha Mar’s construction will resume during the 2016-2017 Budget unveiling, which is set for May 25.

Several observers yesterday suggested that starting construction without having selected a Baha Mar buyer, and sealed a deal with them, raised immediate questions and potential problems.

Given that CCA has indicated it will not resume work until its pre-receivership costs, amounting to millions of dollars, are paid, one source queried whether the China Export-Import Bank would finance these, and then pass the costs on to the winning bidder via a higher purchase price.

They also asked whether this was another move to protect CCA, and maintain its role with the project, despite Baha Mar’s previous allegations of “shoddy workmanship” and inflated construction invoices.

As regards the latter, another source queried whether CCA, if re-engaged, would engage in the same conduct and charge elevated costs- all of which would likely be passed on to a buyer.

The China Export-Import Bank, too, has shown a marked reluctance to invest more money in Baha Mar, which it would have to do in financing the construction resumption.

Meanwhile, Tribune Business understands that the Chinese bank is opposing Mr Izmirlian’s demands that the rights to all Baha Mar’s legal claims against CCA and its parent be sold/transferred to someone else.

Baha Mar’s secured creditor is understood to be arguing that the project’s assets “are worth significantly less than the debt” it is owed, and that the completion guarantees given by CSCEC have no value.

In their petition, Mr Izmirlian and his Granite Ventures vehicle provided the Supreme Court with two options they claim will result in ‘monetising’ the value of Baha Mar’s claim against its contractor for the benefit of all creditors, including itself.

Granite Ventures is seeking an Order that will place “custody and control” of the action against CSCEC into the hands of either a Baha Mar creditors’ committee or the joint provisional liquidators

The $192 million claim against CSCEC seeks to enforce its May 12, 2011, guarantee that China Construction America (CCA), its subsidiary, would perform all necessary obligations under the terms of its Baha Mar construction contract.

The action was filed in the UK High Court on June 30, 2015, one day after Baha Mar sought Chapter 11 bankruptcy protection - a move that was ultimately defeated in the Bahamian and Delaware Courts.

Mr Izmirlian and Granite Ventures are arguing that Deloitte & Touche is neglecting to chase one of the most valuable potential recovery sources for the project’s creditors.

“The receiver-managers [Deloitte & Touche] have failed to pursue either adequately or at all the Baha Mar claim, and have rejected an offer by Granite to buy the Baha Mar claim and then pursue it, to the benefit of the respondent [Baha Mar],” Granite Ventures alleged in court filings.

“Neither the receiver-managers nor the joint provisional liquidators have taken any material steps to realise the value of the Baha Mar claim, even though it is a significant asset in the company’s estate.

“Granite believes.... that realisation of the Baha Mar claim would significantly improve the prospects for recovery for the company’s Bahamian creditors.

“The directions sought [from the court] will put in place a procedure by which the value of the Baha Mar claim will be realised for the benefit of the company’s creditors.”