The Battle for Baha Mar
Far from over, the battle for Baha Mar is just getting interesting.
Baha Mar filed a Chapter 11, many not so savvy reports called this the end, but a Chapter 11 filing is simply protection from creditors given to a company in financial difficulties for a limited period to allow it to reorganize.
When a business is unable to service its debt or pay its creditors, the business or its creditors can file with a federal bankruptcy court for protection under either Chapter 7 or Chapter 11.
In Chapter 7, the business ceases operations, a trustee sells all of its assets, and then distributes the proceeds to its creditors. Any residual amount is returned to the owners of the company. In Chapter 11, in most instances the debtor remains in control of its business operations as a debtor in possession, and is subject to the oversight and jurisdiction of the court.
To prove the Point here are Donald Trumps $ yes FOUR Chapter 11 Filings, take a look
The fight is now down to the Lyford Cay-based Izmirlian family and the Chinese Government, now that part is a little more ominous than a Chapter 11 filing.
In the long term Baha Mar, in some form will open and will be a hit, the battle is really how much control each party will have as owner/operator, The Government of the Bahamas is just a noise factor that occasionally gets in the way of things happening.
Baha Mar Ltd. issued the following statement with regard to the Prime Minister’s decision announced last night:
“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.
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.
Here are the plain hard facts:
Baha Mar adjourned a hearing on its application for recognition of the U.S. Bankruptcy Court’s orders until this coming Monday July 20th, such that the parties can negotiate a global resolution that would permit completion of the project. The matter was not adjourned for the Government to pursue legal remedies.
Discussions seeking a consensual resolution between Baha Mar, China State Construction and The Export-Import Bank of China continued to take place in Beijing today—even as the Prime Minister implemented this unnecessary action.
Baha Mar believes that these parties have developed an understanding of what is needed to finish the project and are willing to provide the required financing. As the Prime Minister had correctly stated to us, once the parties have agreed on such a pathway for consensual resolution, the rest is just details.
The discussions were not ended; 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. In effect the Government of The Bahamas legal maneuvers are an attempted nationalization of a private investor’s assets.
Further, Bahamas law itself provides for recognition of proceedings such as Chapter 11 to give legal effect on Bahamas soil. Such mutual recognition of cross border insolvencies is a common international legal standard existing among many countries.
Many of the statements of the Prime Minister are just plain misleading:
There was no agreement in June as the Prime Minister said. There was a not 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 has not refused to dismiss the Chapter 11. We have agreed to dismiss the case as soon as parties have a mutually-beneficial binding agreement to the benefit of all parties, an interest the Government should share, rather than taking actions that risk irreparably damaging the discussions.
Even so, the Chapter 11 is not an attack on the sovereignty of the country in any manner. The application for the recognizing orders was not intended to enjoin any action by the Government.
The project was on budget, even with a four month delay, had it opened on March 27th, the date that China State Construction repeatedly promised the developer and the Prime Minister, including during his visit to Beijing in January. The project continued to survive past that date, and employees were paid, in no small part due to contributions of more than $18 million by the Izmirlian family. The Izmirlian family has invested over $900 million in the project, has repeatedly announced its willingness to invest millions more, as recently as offering $80 million to Baha Mar last week.
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.
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.”
About Baha Mar
Baha Mar is set on 3,000 feet of white sandy beach just 10 minutes from Nassau’s fully renovated and expanded international airport. It will feature elite hotels with gaming, entertainment, private residences, shopping and natural attractions that reflect an authentic Bahamian experience. Amenities will include a Jack Nicklaus Signature golf course; 200,000 square feet of flexible convention facilities, including a 2,000-seat entertainment venue; art galleries featuring Bahamian art; more than 40 restaurants, bars and clubs; global luxury designer and local artisan boutiques; and 20 acres of exquisitely landscaped beach and pool experiences, including a beachfront sanctuary with native Bahamian flora and fauna. For more information during this process please visit www.bmpathforward.com.
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