By NEIL HARTNELL
Tribune Business Editor
A pioneering Freeport-based stem cell therapy provider had just $335,218 in cash to cover more than $13m in liabilities when it was placed into Supreme Court-supervised liquidation.
The full extent of the Okyanos Centre for Regenerative Medicine's financial quagmire was revealed in Justice Indra Charles' August 31, 2020, decision explaining her rationale for granting the winding-up of a company that was seen as a key player in The Bahamas' efforts to kickstart medical tourism.
Despite Cheryl Simms, the Kikivarakis & Co accountant now confirmed as Okyanos' full liquidator, showing the company had just $5.667m worth of assets (including that modest cash sum) to cover $13.22m in liabilities, thereby creating a $7.553m solvency deficiency, the judgment reveals Justice Charles queried whether it should remain in provisional liquidation to give it a chance to recover.
"The court inquired of [John] Delaney QC, appearing for the petitioner, whether 'soft touch' provisional liquidation might be an alternative to a full-blown liquidation leading to the ultimate dissolution of the company," Justice Charles recorded.
"‘Soft touch’ liquidation would leave provisional liquidation in place, thereby offering protection against individual creditor actions, and enabling breathing space for a restructuring of debts. And, assuming no wrongdoing by directors, the Board of Directors may remain in place with protocols between the provisional liquidator and the directors."
However, Mr Delaney said L. S. Enterprises, the company behind the winding-up petition, was a related party to Okyanos given that the two had common directors on their respective Boards. And, accepting that both Boards were in favour of liquidation, Justice Charles accepted that Okyanos was insolvent and had ceased trading.
Her judgment confirmed that L. S. Enterprises was owed more than $12m on some $15.9m that it had advanced to Okyanos via four separate lending facilities agreed between 2017 and 2019. The stem cell therapy provider's troubles, though, were ignited by Hurricane Dorian which allegedly caused more than $2m worth of damage at its First Commercial Centre offices.
"In the immediate aftermath of Hurricane Dorian, the company’s premises, operating facilities and equipment were not functioning nor functional," Justice Charles said. "The Company attempted to mitigate loss and damage by moving equipment and supplies to a climate controlled storage and preparing the company’s operating facilities for mold remediation but that was allegedly hampered by the landlord, whose servants and/or agents instructed the company’s personnel to cease and desist from such activities."
First Commercial Centre is headed by former Grand Bahama Port Authority chairman, Hannes Babak, with attorney Andre Feldman sitting on the Board. The landlord invoked arbitration proceedings after Okyanos gave notice it was terminating the lease, but any action was stayed by the provisional liquidation.
"Following Hurricane Dorian’s devastations, the company’s business ceased, and never resumed," Justice Charles added. "The company filed claims for damages with its insurance agents for losses arising out of the hurricane, but had not received the majority of such insurance proceeds."