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Baha Mar’S Foreign Creditors To Get ‘3-4 Cents On Dollar’ Offer

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

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.

Comments

kellyrum 7 months, 1 week ago

The committee, the bank and the government will be making a huge mistake if in fact this article is true. The negative public relations and financial impact this decision will have will end up costing a substantial amount more in the end if they are not paid in full. You may want to reconsider the outcome of 200 + expats in the hospitality and casino industry and foreign creditors in the USA and other countries sharing their story on how they were treated and the reasons why tourists, companies and vendors abroad should boycott Baha Mar and the Bahamas in general.

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banker 7 months, 1 week ago

There is going to be trouble attracting talent if you know that you won't be paid when things go wrong. Thinking of the execs who came from the American casino system who were introducing state-of-the-art systems. They will get second rate professionals. In particular, thinking of the folks involved in fields like Digital Strategy, Content Generation, Booking Platforms and the technology behind modern hotel systems.

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Well_mudda_take_sic 7 months, 1 week ago

The unequal treatment of the unsecured foreign creditors is a fraud perpetrated against them by the Claims Committee members and the China Export-Import Bank, and slimey James Smith in particular knows this to be a fact. The main creditor in any liquidation/insolvency proceeding under our laws does not have the right to vary the interests and/or rankings of unsecured creditors based on whether they are Bahamian or foreign.

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Gotoutintime 7 months, 1 week ago

Anyone who invests in the Bahamas in the future is just plain "Nuts".

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Baha10 7 months, 1 week ago

This cannot be legally right to grant preferential treatment to certain creditors based on nationality.

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ohdrap4 7 months, 1 week ago

well it is noted that this issue did not attract many comments. Bahamians do not care about foreigners.

The tribune has published over the years numerous accounts of discrimination against foreign spouses of bahamians or the so called paper bahamians and no one does anything to change the situation.

these foreign contractors are even more removed from this situation.

A former employer of mine was once sub for a foreign contractor and the top boss came to the bahamas to resolve some outstanding issues, he was incredulous to see that the difficulties of doing business were real. he said his company would never again do business in the Bahamas. that was in 1993.

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Porcupine 7 months, 1 week ago

We are working hard to slither to the bottom of the barrel. It is horribly ugly in The Bahamas, and getting worse. Talk, talk and more talk, while the country crumbles. Talk about being on a loosing team. Welcome to The Bahamas. Just when one would think it can't get any worse, it gets incredibly worse.

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realfreethinker 7 months ago

So how much was James Smith and the rest of the scammers paid? I bet he got his first,or have that set aside out of the balance.

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Well_mudda_take_sic 7 months ago

Rumours abound that James Smith's apparent eagerness to assist the government whenever and wherever possible with their perpetration of so many illegal acts and wrong doings is the quid pro quo for the government contracting companies owned by his infamous Greek paymaster to provide financial services to public sector entities. It certainly does seem that James Smith, like his notorious Greek paymaster, has little regard for the difference between right and wrong.

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stoner 7 months ago

The Govt and the people of the Commonwealth of the Bahamas is getting another mouthful from Creditors who were working on the Baha Mar Project and Casino on Cable Beach.This is of great concern to individuals and Companies who will be asked to do business in that Country in the future. They were not treated fairly and will look at this settlement as fraudulent in the eyes of the Bahamian Law. The Bahamian Contractors getting 100% on the $ is just unfair in the eyes of law in any civilized County in the World.Good luck on future/foreign contractors who are asked to build/construct in your Commonwealth. It was always my opinion that the Bahamas operated under the Law established under the English Common Law system and is upheld by all civilized Countries in the World except France and the Province of Quebec in Canada who uphold a different statues of law.

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Honestman 7 months ago

All creditors, regardless of nationality, should have received their proportionate share. What message does this send to potential foreign investors? The whole Baha Mar debacle has shredded the reputation of The Bahamas in the eyes of foreigners as a place to do business. Future foreign direct investment? You can write that off.

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ThisIsOurs 7 months ago

"out of the $100 million made available by the China Export-Import Bank."

I thought this money came from Good Samaritan Perfect Luck? Then we found out they didn't pay VAT. Then we found out, oh the VAT was "forgiven" in exchange for this payment. Then we found out they hadn't actually bought the property. Now we find out the money actually came from the bank???? These details are likeChinese water torture, drip drip drip...

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