The Tribune

By RASHAD ROLLE

Tribune Staff Reporter

rrolle@tribunemedia.net

BAHA MAR warned yesterday that the Bahamian government’s objection in the Supreme Court to advancing its US Chapter 11 bankruptcy process could result in the resort making “drastic and regrettable steps, including substantial staff reductions”.

Signalling the escalating division between the resort’s developer, Sarkis Izmirlian, and the Bahamian government, Baha Mar expressed “alarm” at the government’s objections, noting that the Office of the Attorney General made a joint request with the Export-Import Bank of China that was granted by the Bahamian Supreme Court.

The resort’s warning of major layoffs came even though it was seeking ratification from the Supreme Court for – among other things – severance financing that would have an unidentified impact on the resort’s employee base if the resort’s financing issues were not resolved in a timely manner.

The Supreme Court adjourned the case until next Tuesday during a hearing on whether it would ratify a US Delaware Court’s ruling allowing Baha Mar to begin tapping into $80m in debtor-in-possession financing as part of its bankruptcy filing. Thirty million of this financing is to be used over a 30-day period.

Resort officials have said this is needed to keep the property on track for opening and to pay employees in the short-term.

Supreme Court Justice Ian Winder granted the Office of the Attorney General and the Export-Import Bank, the resort’s financier, permission to be included as respondents to Baha Mar’s application.

The court also ordered that Baha Mar give the Office of the Attorney General employee payment details so the government could arrange to pay employees in the interim.

After the hearing, Baha Mar said: “This adjournment unfortunately makes it impossible at this time to act on the US Court approvals we received (Wednesday), which would allow us, among other things, to pay salaries and benefits for Baha Mar citizens as well as pay ordinary course suppliers and vendors for goods and services post the commencement of the Chapter 11 process. The adjournment has very troubling implications for both the Chapter 11 process and our efforts to position Baha Mar to complete construction and open successfully.”

Baha Mar said it would comply with the Supreme Court’s directive to provide the government with information that would let it pay the salaries of employees for the period ending July 3, 2015.

However, the resort added: “ . . .The government’s unorthodox request for the direction appeared redundant in light of the US Court (Wednesday) granting Baha Mar its (debtor-in-possession) financing and approving Baha Mar’s motion to operate and fund its payroll in the normal course.”

This comes days after Prime Minister Perry Christie said the government would not take any sides in the ongoing dispute between Baha Mar and its Chinese creditor.

On Tuesday night, Mr Christie pledged that the government would continue to help mediate talks between all parties involved and ensure that the interests of Bahamian workers are given priority.

But at a press conference yesterday, Attorney General Allyson Maynard Gibson suggested that among the reasons the government opposed Baha Mar’s application is that it would have “serious and far-reaching implications for the Bahamas as a sovereign nation” if the US bankruptcy courts were primarily responsible for adjudicating the case.

She said the government also opposes behaviour that treats Bahamian employees like “pawns” who would only be paid if conditions like approving Baha Mar’s Chapter 11 process takes place.

In its statement yesterday, Baha Mar also said: “The government’s objection is quite alarming. As we have made clear all week, time is of the essence for Baha Mar. Having Baha Mar succeed is extremely important to the long-term economic well-being of the country.”

Baha Mar’s stance that preventing the Chapter 11 process from smoothly taking place could result in substantial staff reductions reflects the opposing view the resort has from the government on whether it could resolve its issues with its lender, the China Export-Import Bank, and its contractor, and China State Construction, in a reasonable time.

Asked yesterday if the government believes the two sides could resolve their issues this month, Mrs Maynard-Gibson said: “We wish they could be resolved yesterday as the prime minister said. We are hoping too that it will be resolved outside the court.”

However, in its statement, Baha Mar suggested it has exhausted the efforts it is willing to take to resolve the matter with its lender and contractor out of court, saying: “Extensive efforts to reach a compromise with our lender and our contractor have been fruitless, and if we are frustrated in taking advantage in the Bahamas of the US Chapter 11 process for very much longer, drastic and regrettable steps, including substantial staff reductions, will have to be taken.”

Mrs Maynard-Gibson did not say whether the Bahamian government is prepared to pay Baha Mar employees salaries beyond this month if the disputing sides are unable to resolve their differences, citing a desire not to comment in order to not prejudice the court matter.