The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Baha Mar’s 2,000-plus former employees have been bluntly informed that their end-September payouts will be made on a “take it or leave it basis”, with little room for them to dispute the compensation offered.

The five-person creditor payout committee confirmed this hardline stance in a new ‘frequently asked questions’ posting to its website, which said it “intended” to ensure “all amounts” due to former Baha Mar staff were paid.

The committee’s latest posting said the sums that will be offered, and paid, to ex-Baha Mar staff at month’s end will be based on the amounts shown as owing to them by their employment records up to end-October 2015.

“The committee’s intention is to ensure that all amounts due to employees will be paid,” its ‘frequently asked question’ posting said.

“We will certainly consider correcting the settlement sum offered to you if there has been a mistake. However, please do note that while we are happy to discuss your case, you have no legal entitlement to any funds that the committee is administering, and the offer that will be made to you is on a ‘take it or leave it’ basis.”

This leaves former Baha Mar staff with little doubt as to where they stand - that they will have little to no choice to accept what is offered to them, and there is virtually no room to dispute or negotiate what they are offered.

The creditor committee also warned the ex-employees that while they could reject its payout offer, and take action against their former employer, this was “unlikely to result in a material payment to you”.

This, as its posting helpfully explains later, is because their former employer, Baha Mar Ltd, is insolvent and has no assets to pay any of its debts or bills - a situation that effectively forces ex-staff to accept their offer.

James Smith, the former minister of state for finance who is chairing the creditor payout committee, told Tribune Business yesterday that there was “a high probability” that former Baha Mar staff would receive 100 per cent of what was due to them.

He added that the payouts would include due severance pay (as stipulated by the Employment Act) and any outstanding salaries, plus payments in lieu of notice and outstanding National Insurance Board (NIB) contributions.

Unpaid pension payments will also be covered by the payouts, although several sources pointed out that this - and NIB contributions - were mandated by law.

Mr Smith, meanwhile, said he expected the employee payout process, which is scheduled to take place between September 27-29, to go relatively smoothly given that both sides knew what was owed.

He explained that Baha Mar’s remaining human resources personnel, together with the project’s Deloitte & Touche receivers and joint provisional liquidators, would possess details on what was due to each terminated employee.

“I believe a lot of this has been accumulated before,” Mr Smith told Tribune Business. “The period is to October 2015, and I believe most of this, if not all, will have been submitted for the court’s consideration.

“That’s why the rather tight deadline has been selected for the employee payouts, as much of the employee information has already been collated, and there will be very little change from what was submitted to the courts.”

This will form the basis of the ‘offer’ that will be made to each employee by Perfect Luck Claims Ltd, the special purpose vehicle (SPV) that has been created specifically to purchase claims held by Baha Mar creditors.

The five-person committee will merely be administering the funds injected into Perfect Luck Claims Ltd, with the financing coming from Baha Mar’s secured creditor, the China Export-Import Bank, under the terms of its agreement with the Christie administration.

Tribune Business understands that all former Baha Mar employees were given a print-out of what was owed to them when they were terminated, and Mr Smith said he “didn’t expect much difference” between this and the information possessed by the committee.

“I think that in many of the cases, if not all, discrepancies on the staff side will be very low, if non-existent, and will not result in someone not signing for a cheque,” he added.

Mr Smith said the fact that ex-employees, and other Baha Mar creditors, had no right to the funds set for distribution by Perfect Luck Claims Ltd was “being muddied for various reasons in the public domain”.

Given that the debts are owed by Baha Mar, the funding from China Export-Import Bank is being made available on an ex-gratia basis, as the latter has no legal obligation to do this.

Mr Smith suggested that former Baha Mar staff, and other creditors, were likely to view the claims payout process more positively than the “naysayers”, given that they had likely written off their prospects of recovering a single cent for more the past 18 months.

“We wanted to do that [payout the employees] first because it shows goodwill and there will be a higher satisfaction rate among a larger number of people,” he told Tribune Business.

“I think that once we get on the road, the noise in the marketplace should abate somewhat.”

Meanwhile, the committee’s latest pronouncement also confirmed that by purchasing claims, Perfect Luck Claims will take Bahamians’ places as a creditor of Baha Mar.

Several observers have suggested privately to Tribune Business that this shows the China Export-Import Bank intends to recover the sum it will pay out to Bahamian creditors, possibly by adding this sum to the purchase price it will seek in a Baha Mar sale.

Mr Smith declined to comment on how much the China Export-Import Bank is making available for creditor compensation, but Tribune Business was again told yesterday that the total figure was $100 million.

The former Cabinet minister added that he was unaware of what the Chinese bank planned to do with the claims acquired by Perfect Luck, but several disgruntled observers likened the SPV to a ‘vulture fund’.

These funds acquire distressed debt at a discount, then seek to extract a ‘king’s ransom’ from the debtor - even to the point of holding them to ransom.

One former Baha Mar staffer, speaking on condition of anonymity, said: “This is exactly like a vulture fund, and the Bahamian people are once again being taken for a ride.

“Right before the election, they are throwing some pennies to people. They’re paying you out with the money you’ve worked for, and telling you that if you don’t take it, you won’t get anything.”

Mr Smith, though, refuted the ‘vulture fund’ label, and said of the China Export-Import Bank: “They’re saying: Look, we don’t have to pay you, but if we pay you, we buy what might have been your claims.

“It clears the way for the bank to go into a different stage of development.”

Mr Smith added that it was currently impossible to suggest how much Baha Mar creditors owed more than $500,000 will recover.

He said this would be determined by the number of claims submitted, and how valid they were, plus how much funding was left after the staff payouts.

“It’s very difficult until they’re [non-staff claims] are all in, and they’re not all in,” Mr Smith added.