By NEIL HARTNELL
Tribune Business Editor
Baha Mar’s remaining foreign creditors will likely receive an offer this week to pay them “three-four cents on the dollar”, the claims committee’s chairman revealed yesterday.
James Smith, former minister of state for finance, told Tribune Business that the small recovery would be paid from the remaining funds out of the $100 million made available by the China Export-Import Bank.
Disclosing that the committee had paid out “in the high $90 millions” to Bahamian creditors, including contractors, vendors and former Baha Mar staff, Mr Smith said the sum available to remaining foreign creditors is likely equivalent to what they would have recovered in a normal liquidation process.
“Our work has virtually come to an end, but there’s always a little hangover,” the now-CFAL chairman told Tribune Business.
“At the end of December, we had settled in the high $90 millions with all the local service providers and staff, and most of the foreign contractors.
“Within this week, with the balance of the funds, we’re planning to make an offer to the remaining foreign contractors and suppliers. That offer to them is going to reflect what the might have got in a liquidation process like Chapter 11, which might be three to four cents on the dollar.”
Mr Smith said this recovery ratio was “based on what was left in the pool, and we measure that against the outstanding claim”.
The Government made it clear that it was ‘Bahamians first’ in relation to the $100 million provided by the China Export-Import Bank to pay Baha Mar’s unsecured creditors, as part of the deal to complete the project’s construction, open it and sell it.
Bahamian contractors, vendors and the 2,000-plus former staff were to be ‘made whole’, or as close as possible, in the deal between the Government and Baha Mar’s secured creditor, which still remains confidential under a Supreme Court order.
Mr Smith’s reference to payments to foreign contractors likely refers to compensation paid to companies that are needed by China Construction America (CCA), Baha Mar’s main contractor, to complete the project.
However, the little to no compensation available is unlikely to be well-received by Baha Mar’s remaining foreign creditors, some of whom have recently reached out to Tribune Business for help in finding out the status of their claims, and whether these will be resolved.
Complaining about “delays” in receiving definitive information from the claims committee, Glenztur, a Brazilian-based company that books hotels and conferences for high-end bankers, said it had endured a frustrating wait to discover the fate of a $75,000 reservations deposit it paid to SLS Lux at Baha Mar.
The company, in a September 12, 2016, e-mail to the claims committee, said: “The hotel did not fulfill the contract obligations because it did not provide the accommodations as agreed in the contract.
“The Baha Mar hotel was not even open for guests on the specified dates. Therefore, the deposit should be returned in full to Glenztur as soon as possible.”
The Brazilian company added: “It should be noted that the value deposited could not be used to defray expenses of the hotel or any other Baha Mar company expenses.
“The value deposited should be kept separately from ordinary company incomes. Moreover, the existence of an equitable charge in favour to China Export-Import Bank does not refute Baha Mar’s obligation to return the deposit immediately.”
Glenztur was assigned a claims number after submitting its claim to recover the $75,000, and was informed by the committee on November 23, 2016, that “Bahamian claims were to be dealt with first” and still being worked through.
The committee added that all claims were supposed to be dealt with by year-end 2016, but this did not happen.
As a result, Glenztur e-mailed back on January 9, 2017, saying: “Glenztur is a small family-owned business, and the amount which is owed to us is very much needed.
“We would very much appreciate a straight answer as to what are our chances to receive what is due to us, and if so, an approximate payment date.
“After so many public statements as to payments to non-Bahamian unsecured creditors, and establishing a deadline of December 31, 2016, we find ourselves in the very same situation as October 2015.
“We are well aware that the Exim Bank China and their SPV have no obligation regarding payment to the Baha Mar creditors, but we very much need to know where we really stand, in order to be able to study whatever other options are available to us.”
The committee replied by saying that it was seeking to “make a final settlement offer by January 31 or earlier if possible”.
Mr Smith yesterday explained that any ‘delay’ had been caused by the continuing wait for the Supreme Court to rule if any preferential creditors, who would rank ahead of the China Export-Import Bank, existed and had some claim to some of the Baha Mar companies’ assets.
Tribune Business revealed previously that Baha Mar’s receivers have set aside $3 million to cover potential claims by preferred creditors - chiefly former Baha Mar expatriate staff - against 17 companies whose assets were transferred to the China Export-Import Bank’s special purpose vehicle (SPV).
Should the Supreme Court determine there are preferential creditors of these 15 companies, it will then have to determine how much each is entitled to and how they are to be paid.
Tribune Business understands a two-hour hearing was held on the matter on January 20, 2017, with another scheduled for February 24.