The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Baha Mar’s creditor payout committee believes it will “have dealt with” about 80 per cent of Bahamian vendor and contractor claims by tomorrow, as it explores ways to “speed up” the process.

James Smith, the former minister of state for finance who is chairing the committee, told Tribune Business yesterday that it was offering settlements “in the region of $500,000” to creditors seeking early settlement.

In return for moving up the queue, these Bahamian corporate creditors may be freely accepting sums slightly less than what they are owed, Mr Smith acknowledged, as the committee sought to complete the payouts by year-end.

He added that the committee, which is using $100 million in funding by China Export-Import Bank to finance claims settlements, was now focusing on Bahamian creditors owed more than $500,000 and those whose demands were more “tricky” to resolve.

Mr Smith explained that the committee was dealing with Bahamian claimants who may have been sub-contractors of local and international companies hired directly by Baha Mar, and those who may be storing construction materials needed to complete the $3.5 billion project.

He added that with the ‘funding pool’ shrinking, as the claims payout process neared its conclusion, the committee needed to take extra care with the settlements on offer.

“It’s an ongoing process, and we’re hoping that by the end of this month - in two days time - we could have dealt with 70 per cent, and possibly 80 per cent - of the service providers,” Mr Smith told Tribune Business.

“We’re dealing with the remaining creditors, which would involve those owed in excess of $500,000; there have to be less than 30.”

The biggest Bahamian creditor is the Government, and its various agencies, who claimed to be owed $59 million when it petitioned to put Baha Mar into liquidation last year.

The majority of this sum, some $26 million, was said to be owed to the Bahamas Electricity Corporation (BEC), with the remainder spread around the likes of NIB, Water & Sewerage, the Gaming Board and the Treasury in terms of unpaid taxes.

Of Baha Mar’s 20 largest unsecured creditors at the time of the Chapter 11 filing in June 2015, only a few besides BEC were Bahamian. They were Osprey’s joint venture with Yates, valued at $5.281 million; TBI Caribbean’s $2.353 million; Cable Bahamas with $1.435 million; Cable Beach Resort Association at $1.219 million; and Island Site Development with $1.153 million.

The larger creditors are now taking the committee’s focus, after it paid out nearly 2,000 former Baha Mar staff what was due to them in salaries, redundancy pay and other benefits, and settled with smaller Bahamian corporate creditors owed $500,000 or less.

Mr Smith said: “After having processed and settled on virtually two thousand (1,938) former Baha Mar staff members, the Claims Committee, together with its technical support team, reviewed the remaining categories of outstanding Bahamian companies and individual service providers to the project - those claims that were less than $500,000 and those that were in excess of $500,000.

“Guidelines have been given to the payments team, and..... approximately 140 checks have been issued.”

Mr Smith added that there were around 275 Bahamian vendor claims, “and further negotiations and reconciliations are still scheduled to be completed by year-end”.

“We’re trying to speed up the process,” he further told Tribune Business yesterday. “We would make an offer to a Bahamian firm in the region of $500,000, and if they accept that we will settle with them.

“If they don’t have a problem accepting an offer, we will get them out of the way... Like everything else we want to get ones that are easy to settle paid out rather than burn a lot of time. Once we get those out of the way, we will look more closely at what remains.”

Mr Smith added that the payout committee was also advising Bahamian sub-contractors of when those firms who had contracted them were paid what was due, as they needed to obtain their compensation from them rather than the committee directly.

And it was also dealing carefully with service providers who might be needed to complete Baha Mar, or who were holding essential construction materials for the project.

“When you get down to this part of the process, you have to be more careful,” Mr Smith said. “If not, you don’t have sufficient in the pot and have to be careful how you settle.

“There’s not a great deal of them, but there are some tricky ones. We know, for instance, that there have been cases where the local guys are storing a lot of material in their warehouses that is needed to start the job again, and they need access to those materials. There’s no point in upsetting those guys.”

Mr Smith said that based on Baha Mar’s corporate documents, and court records, not all potential claims had been submitted to the payout committee.

And he suggested that Baha Mar’s foreign creditors were unlikely to be fully compensated, given that the agreement between the Government and China Export-Import Bank was focused on their Bahamian counterparts.

The two have been able to favour Bahamian creditors because the funding for the payouts is coming from the latter, not Baha Mar, taking the process outside the receivership and provisional liquidation.

“We feel pretty certain we would complete our job by that timeline [of year-end],” Mr Smith said. “I think we stand a good chance of getting a high percentage complete at the end of the year; maybe not to the satisfaction of everyone, but there will be good satisfaction overall, I suspect, given the nature of the procedure itself.”