0

Judge Clears Way For $2.8bn Revival

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Supreme Court has cleared the way for the former Ginn project’s $2.8bn revival, and creation of up to 1,400 full-time Bahamian jobs, by declaring Old Bahama Bay’s lease “null and void”.

Justice Keith Thompson, in an interim order signed on Christmas Eve, found that the six-and-a-half year-old lease of the Grand Bahama resort to its condominium owners had “expired” and was “of no further effect”.

He then ordered that the 73 condo owners and their company, Island Ventures Resort & Club (IVRC), give “vacant possession” of Old Bahama Bay “forthwith” to Lubert Adler, the US real estate financier whose investment funds own the resort and 280 acres of West End real estate.

Justice Thompson also adjourned, or stayed, all other proceedings related to IVRC’s battle with Lubert Adler, although he moved to address the condo owners’ key concern by directing that the US financier find a temporary operator/manager for Old Bahama Bay.

The order, which has been obtained by Tribune Business, said it was “declared that the lease dated June 1, 2012, and made between Lubert Adler and IVRC..... has expired and is null, void and of no further effect”.

Besides ordering that Lubert Adler “be given vacant possession of the leased premises forthwith”, Justice Thompson also directed that the US financier “use its best reasonable endeavours to enter into a transitional license or other short-term arrangement for the management of the leased premises with either IVRC or other service providers as may be commercially practicable”.

The ‘bigger picture’ effect of Justice Thompson’s Order is that it seemingly paves the way for Toronto-based Skyline Investments to move ahead with the acquisitions that are key to fulfilling its ambition of pulling off a $2.8bn, 10-year revival of the former Ginn project.

IVRC’s resistance, and initiation of Supreme Court action, had threatened to block Lubert Adler’s sale of Old Bahama Bay to Skyline, thereby thwarting a key component in the Canadian developer’s plan.

It will not close a $42m deal for the entire former Ginn project unless, and until, it can obtain free and clear title to Old Bahama Bay and all its resort assets - something that Justice Thompson’s interim Order now appears to provide.

This outcome is also understood to have been much desired by the Minnis administration, as IVRC’s court challenge was threatening to delay, and potentially even derail, a major foreign direct investment (FDI) project that the Government was relying on heavily to turn around Grand Bahama’s moribund economy.

Justice Thompson’s ruling, though, does not completely ignore IVRC’s needs. The requirement that Lubert Adler find a temporary manager/operator for Old Bahama Bay until the sale to Skyline is completed tackles the condo owners’ desire for the resort, and its amenities, to remain open as normal through any transition period.

IVRC, in legal documents that accompanied its Supreme Court action, had alleged that uncertainty over Lubert Adler and Skyline’s plans was jeopardising the 1,500 room night and 945 marina dock slip leases it had already booked for 2019 in its capacity as Old Bahama Bay’s leasehold operator.

The condo owners’ company had claimed that it was also acting to preserve the resort’s 103 Bahamian jobs by maintaining the “status quo”, and ensuring the property stayed open, throughout the sales process.

However, a source familiar with Lubert Adler’s position, speaking on condition of anonymity, told Tribune Business that the US-based financier was always going to hire an operator for Old Bahama Bay’s marina and other resort assets until the sale to Skyline is completed.

“They’re not going to leave people hanging,” the source said. “People show up to that marina in bad weather all the time. They have to put something in place for them.”

Yet different interpretations of what Justice Thompson’s interim Order means were already emerging on Christmas Eve barely hours after his signature had dried.

John MacDonald, IVRC’s president, told Tribune Business that based on conversations with the condo owners’ attorneys, Lennox Paton, and his own research, the term “vacant possession” only means handing everything over “in good working order” once the sale to Skyline Investments closes.

Lubert Adler, though, is understood to be interpreting the interim Order - and especially the word “forthwith” - as meaning that IVRC must vacate immediately, and completely hand over Old Bahama Bay and all its assets to it.

And, while Mr MacDonald suggested IVRC will continue operating the 72-slip marina and other resort amenities until the closing with Skyline, Tribune Business understands that Lubert Adler is determined to seek out a different manager given that trust between the two sides no longer exists.

The IVRC president also hinted that the condo owners may seek compensation for “the book of business”, in terms of room and marina reservations, they have built up for 2019. He accused Lubert Adler of expecting to simply walk in and take this over for nothing.

“Vacant possession doesn’t mean that you leave,” Mr MacDonald told Tribune Business. “From what I understand, our lawyers said vacant possession means that when you turn it over it’s in good working condition. From what I understand, we’re going to continue operating until such time” as there is a sale.

He added that Justice Thompson had been urging both sides, IVRC and Lubert Adler, to “work together” with no real changes to the current situation occurring until they went back before the Supreme Court on January 25.

“We’re trying to keep it civil and keep employees employed through the holiday, and they’re [Lubert Adler] saying: ‘Get out of the property’,” Mr MacDonald added. “The judge is not saying: ‘Get out’. He’s saying: ‘Work things out. Work out some kind of term between now and the sale’.

“The status quo is us operating and keeping our employees... If there’s no closing today, why make us fire the employees over the holiday? It’s spiteful or not nice. Never did they send and e-mail telling us to stop taking reservations for 2019. We have correspondence showing otherwise.”

However, an October 15, 2018, letter to IVRC’s attorneys from Scott & Co, Lubert Adler’s Bahamian legal representatives, demands that the condo owners “cease now” the taking of reservations for 2019 as they had been given no permission by the US financier to do so.

Yet Mr MacDonald hinted that IVRC may well seek financial compensation for the “quite a few reservations” taken for 2019. “There’s a book of business, and they think we’re going to hand it over and all the business there,” he told Tribune Business.

“We’ve spent hundreds of thousands of dollars in marketing and repairs to get it [Old Bahama Bay] back to normal, and they expect it to be theirs, which makes no common sense to anybody.

“If we had not taken it on when they were going to close it down in 2011, this property would be in such disrepair that they would probably not have a buyer. We’ve restored it over two hurricanes. If it was not for us, there would be nothing there but our condos.

Still, Mr MacDonald conceded that IVRC would have achieved very little if Lubert Adler is able to take possession immediately. It had initially sought an injunction Order preventing Lubert Adler and Skyline from “interfering or attempting to interfere” with the Old Bahama Bay assets it operates/manages under a lease agreement.

IVRC’s summons, seen by this newspaper, also wanted the Supreme Court to prevent Old Bahama Bay’s current and potential new owners from “evicting or attempting to evict” it from these leased assets, which include the 72-slip marina, gasoline station, retail and restaurants, reception area and other facilities essential to a properly-functioning resort.

Comments

birdiestrachan 11 months, 1 week ago

The out come is also understood to have been much desired by the Minnis administration. How very special. and interesting.

0

TheMadHatter 11 months, 1 week ago

"...and potentially even derail, a major foreign direct investment (FDI) project that the Government was relying on heavily to turn around Grand Bahama’s moribund economy."

"Moribund". I like it. Cool choice of a word for Freeport. Instead of saying, "horrible", "pathetic", "dead", "bankrupt", or "sucks like a brand new vacuum cleaner" - let's say "moribund". Nobody can say there ain't no thesaurus at The Tribune.

0

The_Oracle 11 months, 1 week ago

Sound like a ruling based on political desire/ steering as opposed to being based on the merits of the case itself. Speaks poorly of all involved,

0

Sign in to comment