Nassau, Bahamas — Financially troubled megaresort Baha Mar on Friday blasted the Bahamas government’s decision to file a winding-up petition against the company in the Supreme Court as “an attempted nationalization of a private investor’s assets”, a move the company said puts its staff and assets at “at severe risk, and significantly jeopardizes the future of the resort”.
In a statement, Baha Mar also accused Prime Minister Perry Christie of being misleading in his address to the nation about Baha Mar on Thursday night, insisting that contrary to reports that talks in Beijing, China involving Baha Mar and its Chinese partners fell through, discussions continued “even as the prime minister implemented this unnecessary action”.
In his national address, Christie announced the government, on the advice of its Bahamian, UK and US lawyers, filed a winding-up petition in The Bahamas Supreme Court against the company seeking to bring it under the control of Bahamian courts.
Baha Mar attempted to negotiate a deal with its lender, the Export-Import Bank of China (EXIM Bank) and its major contractor, China State Construction Engineering Corporation (CSCEC), after it filed Chapter 11 bankruptcy in the US on June 29th.
The prime minister said the involuntary winding-up proceedings are designed to work in similar terms as the chapter 11.
However, the process will be controlled by provisional liquidators under the supervision of the Bahamian courts rather than being controlled by Baha Mar CEO Sarkis Izmirlian.
Christie added that EXIM Bank and China Construction America (CCA) Bahamas “have pledged their willingness to work with The Bahamas government in their common objective for the completion and opening of the project in the shortest possible time”.
In a letter sent to employees on Friday morning, Baha Mar said it was surprised by the government’s move, as it was still in discussions with its contractor and lender.
In its statement, the company said it believes the parties have developed an “understanding of what is needed to finish the project and are willing to provide the required financing”.
Baha Mar urged the government against the move and asked it to instead allow the parties to come to an agreement to complete the resort.
“The Bahamian government’s decision to seek a winding-up of Baha Mar is both unnecessary and reactionary, puts Baha Mar’s staff and assets at severe risk, and significantly jeopardizes the future of the resort,” read the statement.
“Baha Mar senior officials have been and continue to be in China, engaged in ongoing discussions with both the general contractor and the lender.
“Yet, notwithstanding those good faith discussions, the government announced in the middle of the night it will seek to liquidate Baha Mar, creating a distraction from these ongoing discussions.”
Baha Mar filed for chapter 11 bankruptcies in the US district of Delaware.
It also filed a lawsuit in the United Kingdom against CSCEC.
A day later, a US judge granted the company creditor protection and access to debtor in possession (DIP) funds, which Baha Mar said was the only way it could complete the resort.
However, a Bahamian court has to approve those orders for them to be enforced in this jurisdiction.
The court matter in The Bahamas was adjourned to allow “good faith negotiations” to continue between the parties.
That matter resumes on Monday.
Baha Mar restated that it sought to continue negotiations, moving to adjourn its applications for recognition of the US Bankruptcy Court’s orders until July 20th.
The company reminded the prime minister that once the parties have agreed on a pathway for consensual resolution “the rest [are] just details”.
“The discussions were not ended,” read the statement.
“The government left the ongoing discussions to follow its own path rather than to continue to act in a mediator capacity between the private parties as it had announced it would do.
“The government fails to explain how availing itself of the winding-up act of Bahamian law provides more or better relief that the chapter 11 process.
“The statute does not have the robust protections afforded to all creditors under chapter 11.”
The company said The Bahamas’ law has provisions to recognize chapter 11 proceedings in The Bahamas and the recognition process is a common legal standard among many countries.
Misleading
Charging that many of the prime minister’s statements “are just plain misleading”, Baha Mar said the parties never reached an agreement in June as the prime minister claimed.
Following Baha Mar filing for chapter 11 bankruptcy, Christie suggested the government was caught off guard by the move.
He insisted that his personal intervention over the last few months with stakeholders led to a “substantial agreement”.
But Baha Mar said, “There was not a finalized understanding discussed by Baha Mar and the Export-Import Bank of China to which China State Construction and CCA had not agreed.
“Indeed, there was no construction timeline or cost to complete from the general contractor or terms received from the lender.”
Baha Mar also said it has not refused to dismiss the chapter 11, but would do so as soon as the parties have a “binding agreement, to the benefit of all parties, an interest the government should share, rather than taking actions that risk irreparably damaging discussions”.
The company said the move was not an attack on the sovereignty of The Bahamas.
However, Christie said on Thursday night that were the processes to continue in the US, the fate of the project, its Bahamian employees and the international reputation of The Bahamas as a sovereign nation would be in jeopardy.
He said there should be a “Bahamian solution to this Bahamian issue”.
Baha Mar said its application for the recognizing orders was not intended to enjoin any action by the government.
“We urge the government of The Bahamas not to seize private party assets and to allow the private parties, in what is after all a commercial enterprise, to come to an agreement that would allow for the completion and opening of Baha Mar as soon as possible, as the government has publically and explicitly urged,” Baha Mar said.
“For our part, Baha Mar is evaluating its alternatives with respect to addressing the government’s precipitous action and will continue to move forward with its ongoing appropriate efforts to position the resort to be properly completed and opened successfully as soon as possible.”
Christie said he is “absolutely convinced” that the government is on the right path.