The Tribune

By LAMECH JOHNSON

Tribune Staff Reporter

ljohnson@tribunemedia.net

BAHA Mar’s legal team did not mince words yesterday when calling on a judge to dismiss the government’s winding up petition for the appointment of provisional liquidators to speed up completion of the stalled Cable Beach development.

James Corbett and Maurice Glinton, both Queen’s Counsel, argued that Justice Ian Winder was duty bound to void the proceedings having been notified on Wednesday that the government’s filed petition was allegedly in breach of Order 24 (1) of the Companies Liquidation Rules (CLR).

Mr Corbett was responding directly to the government’s attorney, Peter Knox, QC, who told the judge on Wednesday that seven new petitions had been filed against Baha Mar in addition to the original one if the judge accepted Baha Mar’s position that the attorney general’s initial petition was invalid.

Mr Corbett argued: “It’s not a fair point to say it was just an informality and should be ignored.”

“In England and Wales, and in other jurisdictions, winding up proceedings are very serious…informalities matter and non-observance of procedural requirements are liable for proceedings to be struck out.”

He added that the only thought that came to mind when considering the government’s “slap-dash approach to the rules is either because they – as the petitioners – don’t know the rules or they just don’t care.”

The law, according to Order 24 (1) of the CLR, requires, in part that “every originating application under Part VII of the Act shall be made by petition.

“ . . . A petition under this rule cannot relate to more than one company. The court may hear two or more petitions at the same time, but it shall not make any order for two or more petitions to be consolidated.”

The government is seeking to wind up Baha Mar Ltd, Baha Mar Land Holdings Ltd, Baha Mar Properties Ltd, BMP3 (Wyndham Hotel) Ltd, BMP Golf Ltd, Cable Beach Resorts Ltd and Baha Mar Enterprises Ltd on the basis that it is owed upwards to $59m by the mentioned companies.

Mr Glinton, in his contribution to the discussion, said he wholeheartedly adopted submissions made earlier by his learned senior.

He emphasised to the judge that “non-compliance of Order 24 (1) results in defective proceedings.”

“Upon the court becoming aware, it is duty bound to act upon it,” Mr Glinton said, adding that “with the utmost respect, there is no discretion to the extent that has been implied.”

“Yesterday and most of today, this court has heard evidence in these proceedings which could not have begun on the basis of a petition which does not follow the rules.”

Mr Glinton argued that the court “would be remiss” for not disposing of the matter even though it has been made aware of the non-compliance.

He said the purported correction through the filing of the seven petitions is “an abuse of process” and the government’s actions have “put this court in a very difficult position.”

“The attorney general is somehow functioning as a channel through other alleged creditors, who all in unison in regards to their status, are petitioning the court for all companies named in the petition,” Mr Glinton submitted.

Mr Glinton also dispelled the petitioner’s submission that the attorney general is qualified to provoke winding up proceedings through provisions of the Crown Proceedings Act.

Speaking to the government’s claim to having an interest – through its concession to the developer – to justify the current proceedings, Mr Glinton said their contribution “gave the government no equity in this commercial investment.”

He said the government’s interest in the winding-up proceedings “is more of a political nature and it is in that interest which it promotes of being of a national interest.”

On track

In Wednesday’s proceedings, Mr Knox had argued that Baha Mar’s prospects of opening in the “foreseeable future” are unlikely on its current path.

Mr Knox stressed that the project needed to “be put back on track to avoid a downgrade in The Bahamas’ credit rating and the employment situation”.

“It is in the public’s interest that this company is wound up,” he added on Wednesday, citing the number of concessions given to the resort and its inability to open as a failure to deliver on its promised national benefits.

The government’s lawyer for the Gaming Board, Wayne Munroe, QC adopted Mr Knox submissions, which were completed in yesterday morning’s session of the winding-up hearing.

Mr Munroe stressed that the developer’s present conduct was putting the resort on track to have its casino gaming licences revoked.

During yesterday’s hearing, Mr Corbett also challenged the selection of the latest prospective provisional liquidators, Ernst and Young.

While noting that the firm itself was renowned, he said there was the issue of potential conflict.

Megan Taylor, lawyer for Ernst and Young, said the resort’s assertion that the firm could not be a provisional liquidator is unsustainable as the company is not a creditor of Baha Mar.

She argued that the only connection to the resort the firm had was a risk-impact assessment concerning value added tax and resorts that included Baha Mar.

On June 29, Baha Mar and 14 of its affiliated companies filed for bankruptcy in a Delaware court, blaming the resort’s contractor, China Construction America (CCA), for the construction delays that caused it to miss previous opening deadlines.

The resort also took legal action against CCA’s parent company China State Construction Engineering Corporation (CSCEC) in the English High Court.

On July 1, US Judge Kevin Carey approved the resort’s request to begin tapping into $80m in financing to keep the resort on track for opening while it undergoes Chapter 11 bankruptcy proceedings in that state.

However, the Delaware judge’s approval of the debtor in possession financing request was conditional on the approval of the Bahamas’ Supreme Court.

Justice Winder, who presided over Baha Mar’s application for the foreign court’s ruling to take effect, dismissed that request.

The hearing resumes today at 10am.