The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

BAHA Mar’s secured creditor wanted liquidators to remain in place until the land swap with SuperClubs Breezes is completed - a request they were reluctant to comply with.

Minutes from the September 20 meeting of Baha Mar’s creditors, obtained by Tribune Business, reveal that the China Export-Import Bank and its Perfect Luck Claims vehicle wanted the liquidation of Sarkis Izmirlian’s entities to continue until the land transfer between the two resorts was concluded.

Karen Chu, a Perfect Luck representative, told the meeting that the swap between Baha Mar and SuperClubs Breezes would be completed in mid-October at “earliest” - a date that has now been reached.

Tribune Business understands that the transfer agreement has yet to be completed, but the liquidators informed Perfect Luck at the meeting they did not want to extend their work because this would increase their remaining fees beyond the $806,000 already agreed with the Government.

The meeting minutes, referring to the land swap and “mutual releases” needed to effect it, imply that the deal’s conclusion is essential to sealing Baha Mar’s acquisition by Chow Tai Fook Enterprises (CTFE). “Karen Chu advised that the documents must be signed upon closing, and suggested extension of the liquidation to accommodate the signing of mutual releases,” the minutes said. “Ed Rahming questioned the expected date of the signing of the mutual releases. Karen Chu advised that the earliest date was in mid-October.”

Mr Rahming, a Bahamian accountant and one of Baha Mar’s three liquidators, together with UK duo, Nicholas Cropper and Alastair Beveridge of Alix Partners, warned of the financial consequences of continuing their assignment.

“Ed Rahming advised that there is a budget in place, with an agreed shortfall,” the meeting minutes said. “He further stated that the fee payment amount is currently fixed, and had been agreed with the joint receiver-managers and presented to the Government on the basis the liquidations would be completed with the next seven-14 days.

“Ed Rahming maintained that extending the conclusion date of the liquidations may result in unforeseen issues arising, which may result in accrued costs and [an increase upon] the fee amount previously agreed upon with the joint-receiver managers. Karen advised Ed Rahming that additional costs should not be too high as the wording for the mutual releases has already been agreed upon.”

Mr Rahming responded by saying he needed to discuss the matter further, asking whether there were “any other matters that can possibly arise that might extend the liquidation’s conclusion”.

He yesterday confirmed to Tribune Business that the liquidation of the corporate structure created by Mr Izmirlian, Baha Mar’s original developer, was continuing - but not to accommodate the China Export-Import Bank, Perfect Luck and the Breezes land swap’s conclusion.

This transaction is critical to the completion of CTFE’s purchase, because until it closes SuperClubs Breezes owns the land at the heart of Baha Mar’s 100,000 square foot casino - the largest in the Caribbean.

The land swap agreement was set out in a 2011 Letter of Intent between the two resorts. This involved swapping a 0.66 acre parcel, upon which SuperClubs Breezes wastewater treatment plant stood, for land of the same size, upon which Baha Mar was to build a replacement plant at its expense. The agreement also involved Baha Mar’s then-golf course-owning affiliate, BMP Golf, transferring another 2.27-acre parcel to SuperClubs Breezes. The latter also agreed to change the leasehold boundaries of its property, surrendering two areas and gaining an equivalent-size piece of land, to help Baha Mar.

But delays in executing the Letter of Intent impeded SuperClubs Breezes’ expansion plans, and even resulted in a legal battle erupting between the two when Mr Izmirlian was in office. The Supreme Court litigation was subsequently settled, but the two sides and their attorneys have yet to conclude the land swap with the December 1 deadline for CTFE’s purchase closing just six weeks away.

“The liquidators are very near completion,” Mr Rahming told Tribune Business yesterday. “There are a few minor matters we are tying off at this point, and we’re hopeful we’ll be completed very shortly.

“There are a few minor matters we want to make sure we deal with, given the size and scope of the liquidation. We haven’t kept it open for that reason [the Breezes land swap]; we’ve kept it open because there’s a few minor things we have to close off given the size of this thing.”

Mr Rahming, though, said the liquidators were prepared to accommodate the deal with Baha Mar’s Cable Beach neighbour if its closing aligned with the end of their work.

“If we find, upon completing this work, that we still have this thing out there, and it’s only a matter of a few days and weeks to allow that to be wrapped into the liquidation, we’ll do so,” he added.

“We’re fine with what we’ve done in relation to Breezes, and have signed off on all related matters. Our focus is the liquidation. I didn’t state we would keep the liquidation open; I haven’t given any approval on that.

“Our focus is to close out the minor things we need to do, and if at that time they’re still going through what they need to do with Breezes, they can wrap that into the liquidation.”

Mr Rahming said the liquidation’s size and complexity, coupled with the immense public interest in Baha Mar, required the liquidators to be extra thorough “before we seek a certificate of dissolution from the court” for the 24 companies that formed Mr Izmirlian’s corporate structure.

He added that one outstanding issue involved ongoing Industrial Tribunal claims against the former Baha Mar companies, which should have been halted after they were placed into liquidation.

“Ed Rahming advised that there are a number of ongoing litigation matters outside of the liquidation,” the September 20 meeting minutes noted. “He said the liquidators’ attorneys will be filing an application with the court to have these matters set aside. The attorneys for the liquidators are currently working on this.

“Ed Rahming informed the creditors that these are mainly Industrial Tribunal matters that the Tribunal has allowed to continue in spite of the ongoing liquidation. The liquidations result in an automatic stay of all litigation matters, unless the stay is lifted by appearing before Justice Winder.

“Ed Rahming said the application is to have the court write to the Tribunal stating that the specific matters cannot be heard any place other than within the liquidation proceedings, and at this time there is a stay in place.”

Mr Rahming yesterday described the Tribunal cases, and other outstanding issues, as “not material” to winding-up of Baha Mar’s former corporate structure.

“In order to close out 24 companies, if you will, you need to ensure these things are dealt with properly so they don’t come up again,” he told Tribune Business.

The liquidators’ remaining $806,000 fee is supposed to split 50/50 between the China Export-Import Bank and the Government. The September 20 minutes said they were “in the process of obtaining approval” from the Minnis administration.