The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

City Markets’ majority shareholder believes there is “an extremely strong case” for initiating legal action against the Bahamian wholesale industry for alleged breach of agreement, although it wants to leave the final decision to all investors.

Mark Finlayson, principal of the Finlayson-family owned Trans-Island Traders, which holds 78 per cent of the equity in the now-defunct supermarket chain, said the dispute related to the agreement reached with the Bahamas Wholesalers Association after they acquired City Markets in November 2010.

That agreement required City Markets to immediately pay off 50 per cent of the debts owed to wholesalers, and Mr Finlayson said that “in most cases” he was able to reduce these sums to “well below half” the balances he inherited.

However, he acknowledged that Bahamian wholesalers were counter-alleging that City Markets still owed them money. Two vendors, Purity Bakery and Armoured Car Services, recently issued writs against its operating parent, Bahamas Supermarkets, seeking payment of five-figure sums they alleged were still outstanding.

Undaunted, Mr Finlayson said the issue of whether City Markets should pursue legal action against multiple Bahamian wholesalers was one agenda item for its recently-cancelled shareholders meeting, which the Securities Commission ordered it not to hold.

Another talking point, he told Tribune Business, would have been whether to pursue legal action over the lost Harbour Bay store lease.

Mr Finlayson, too, described that as “a strong case” in the opinion of his attorneys, but said it was necessary to determine whether City Markets’ 22 per cent minority shareholders also wanted to pursue the legal action option.

Both the Bahamian wholesale industry and the other parties involved in the Harbour Bay lease situation, the Mosko family as landlords, and BISX-listed AML Foods as tenant (Solomon’s Fresh Market), are likely to take Mr Finlayson’s legal action threats with a ‘grain of salt’.

These have been made several times before, and have yet to apparently result in any Supreme Court proceedings being launched. As a result, they may well believe Mr Finlayson is bluffing, although all are understood to feel they have ‘watertight’ legal positions of their own.

However, the City Markets principal told Tribune Business: “We need to discuss with the shareholders what our next steps will be in relation to Harbour Bay, in relation to the wholesalers. It’s not going to be a short meeting.”

On the wholesale situation, Mr Finlayson admitted it was “a bit of both”. He explained: ‘It’s a bit of both. Right now, they claim we owe them money, and we claim they are in breach of the agreement they made with us.

“When we came into the company, we met them with a very large debt [owed to various wholesalers] in all circumstances. We paid 50 per cent of that, and started doing business.

“We started paying the remaining 50 per cent. In most cases, the debt is well below half of what we originally met.”

Mr Finlayson conceded that “only one wholesaler” had taken legal action to-date to recovery an outstanding balance owed, 
“but we all accepted there was an agreement set out before we paid that 50 per cent with the Wholesalers Association.

“Most of them reached/signed that agreement, and the position is that our lawyers feel we have an extremely strong case,” Mr Finlayson told Tribune Business.

“The question is: In the opinion of all shareholders, is it worthwhile? I see a lot of shareholders deciding to write-off 100 per cent of their investment in Bahamas Supermarkets.

“If that’s the way the shareholders feel, it makes no sense, but if the shareholders feel strongly that we should pursue it, we will have to look at moving forward with it.”

As for the Harbour Bay store lease, which City Markets and Mr Finlayson had wanted to pass to Super Value for $1.5 million, he assured Tribune Business that a lawsuit remained an option.

Harbour Bay’s landlords, the Mosko family, pulled the lease from City Markets and handed it to AML Foods on the grounds that the former had fallen behind on due rent payments.

However, Mr Finlayson said: “With regard to Harbour Bay, we feel we have a strong case, the lawyers feel we have a strong case.

“I don’t think there’s ever been a stronger case before the courts, but we have to see what the shareholder consensus is.”

Meanwhile, Mr Finlayson confirmed that City Markets had yet to receive the $3.5 million purchase price paid by Super Value and its owner, Rupert Roberts, for the three store leasehold interests they did acquire.

Legal matters and paperwork related to the sale are still being completed by attorneys representing the three parties involved (including the former BSL Holdings ownership), and Mr Finlayson said: “We are very close with Mr Roberts.

“He still hasn’t paid a penny of it, and Mr Roberts has put his money into escrow for what seems forever, but there are just a few matters that need to be resolved to complete.

“This is partially my fault, as I didn’t realise there was so much work involved in it, and the complexity of it, for it to take this long. All the attorneys have been working very diligently to see if they can get it resolved.”