The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The owner of Freeport’s Circle Mall yesterday said he was “very confident” the newly-opened shopping complex would not be placed into receivership, arguing that there were “no circumstances that would warrant” such a development.

Hannes Babak, president of L. T. Investments, which is fighting efforts by CIBC FirstCaribbean International Bank (Bahamas) to place it into receivership, pledged that he would challenge the institution’s proposed action at the upcoming Supreme Court hearing, which is set for Valentine’s Day.

L. T. Investments is the company that owns the West Atlantic Drive/Baffin Circle building which houses the Circle Mall, and Mr Babak yesterday sought to reassure his 45 retail tenants that “they don’t have to be concerned at all” as to the outcome of the receivership hearing.

“They [CIBC FirstCaribbean] wanted to do it last week,” Mr Babak said of the bank’s drive to place L.T. Investments into receivership, “but it was pushed back to next week. No receiver has been appointed yet.”

Promising to oppose any receivership attempt, the former Grand Bahama Port Authority (GBPA) and Freeport Concrete chairman said of the dispute between himself and the bank: “First of all, there is a difference of opinion on the facts.

“I know there are no circumstances that would warrant the appointment of a receiver at all.

“They [the Circle Mall tenants] don’t have to be concerned at all. They have a rental obligation, an ongoing business and I will try my best to challenge this.”

Mr Babak said that because the matter was before the Supreme Court, he could not go into detail about the case. The hearing is scheduled for next Thursday, which also happens to be Mr Babak’s birthday.

However, he told Tribune Business he was “very confident” that the bank’s move to appoint a receiver would be defeated, and reiterated: “There are no circumstances that justify or warrant the appointment of a receiver.”

Tribune Business understands that CIBC FirstCaribbean International Bank (Bahamas) has moved to appoint a receiver due to an alleged default by L. T. Investments in repaying the mortgage loan that is secured on the Circle Mall building.

That loan will have financed the property’s construction, and been secured on the underlying assets - namely the building. It is understood the sum involved is around $4 million.

CIBC FirstCaribbean’s action adds a new twist to recent events at the Circle Mall, and potentially further complicates a variety of issues involving receiverships and alleged non-payment of due obligations.

Tribune Business revealed this week how a major tenant of Mr Babak, Butler’s Food World, was trading accusations with its former receivers, who had been appointed via a Supreme Court action initiated by the Circle Mall owner.

Mr Butler alleged that the store’s former court-appointed receivers, HLB Galanis principal Philip Galanis and Chris Baker, had “no idea what they were doing” and effectively ran the business into the ground during the five months they had control.

He is threatening to sue the former receivers to recover the alleged losses his company suffered during those five months, plus money the receivers had taken out in fees.

The Supreme Court-ordered receivership of Butler’s Food World was overturned last Thursday on a legal technicality, Justice Estelle Gray-Evans finding that attorneys acting for Mr Babak had failed to disclose their failure to properly serve Mr Butler’s counsel.

As a result, it is possible that Mr Butler may also seek to recover the alleged losses from Mr Babak, given that the receivers should never have been appointed in the first place.

In response, Mr Galanis told Tribune Business that it was Mr Butler - not the receivers - who had “run it into the ground”.

Alleging that he and Mr Baker inherited “a shambles” after they took control on September 6, 2012, Mr Galanis said they took over unpaid bills such as a $400,000 sum owed to Grand Bahama Power Company, plus over $120,000 in unpaid rent due to Mr Babak.

And Mr Galanis told Tribune Business that Butler’s Food World would have been in even worse straits had the receivers taken out the fees due to them, and said they planned to sue Mr Butler to recover what was owed.

For his part, Mr Babak alleged that Mr Butler and his company owed him “around $250,000”.

HE added that he could have sought to put Butler’s Food World and its parent, Harbour Lobster and Fish Company, into liquidation or evicted them from his building, but chose receivership as the “most humane” option to avoid making around 100 Bahamians unemployed.