WE all have times when what seems to be one thing turns out, with a deeper understanding, to be something very different.
That is actually the position that Baha Mar has been in since filing for Chapter 11 protection in the US Bankruptcy Court in Delaware. Many people have understandably asked why we voluntarily chose this foreign process and didn’t seek relief in a Bahamian court. I did, and now I understand.
As I learned more, I wanted to share an explanation to this question so that my fellow Baha Mar colleagues and the people of The Bahamas have a better understanding of Baha Mar’s path forward and why the Chapter 11 process is critical to the successful completion and opening of the resort.
What I came to understand is that, under US law, the Chapter 11 process provides a business with the time to put in place a sound financial structure and effective working relationships while the restructuring progresses in order to move forward successfully. It also protects the assets of the party for which the Chapter 11 is being undertaken.
Chapter 11 does not require a liquidation; it is a path – not a destination – that enables a company to continue operating while it goes through the process to position itself to try to succeed.
For Baha Mar this means, in short, that Chapter 11 protects the resort from being put at an unnecessary, if not, fatal risk. Chapter 11 also acts as a pause: the court imposes a broad, automatic stay that, among other things, requires suppliers and other creditors to continue working with Baha Mar in the ordinary course, so that it can develop its go-forward plan. And, it permits parties to lend additional funds to meet obligations without the threat of action by a creditor, such as a bank, to exercise remedies. Indeed, who would lend money to a company if, the next day, a creditor could foreclose and seize it?
For this reason, it didn’t surprise me to find out that Chapter 11 has been utilised by some of the world’s largest and most widely known companies under various scenarios, including companies such as American Airlines, Delta and General Motors, not to mention international companies such as Prisa, of Spain, TMT Group, and Maxcom Telecom, of Mexico, among others.
Unfortunately, here in The Bahamas, there is no statutory restructuring law. Bahamian statutory laws provide only for liquidation and receivership, ie the appointment of a receiver and/or the dissolution of the company and the distribution of its assets among its creditors. There is no Bahamian equivalent to the Chapter 11 restructuring process. Bahamian insolvency proceedings would mean Baha Mar would be liquidated, all the employees immediately terminated and suppliers paid little if anything for outstanding debts. There would be no opportunity for Baha Mar to move forward.
Beyond these questions of law and jurisdiction is another question I know many are asking: “Why didn’t Baha Mar provide advance warning of the Chapter 11 filings?”
The reality is simply that when a company is preparing to enter the Chapter 11 process, it is not practical or advisable to give anyone advance notice. Doing so could potentially jeopardise the whole protection that the Chapter 11 process would provide. Creditors who become aware that a company is preparing to enter Chapter 11 might take drastic measures to recover the debts they are owed, and those measures, without the Chapter 11 protection in place, are likely to produce results that are needlessly damaging to the company and unfair to the other creditors. Giving advance notice of the Chapter 11 proceedings would, therefore, have jeopardised both the ability of Baha Mar to address the important issues it faces constructively and its future.
Can you imagine a scenario in which a football player signals to the goalkeeper which direction he intends to kick his penalty shot? This would be totally self-defeating and ruin any chance at success.
Baha Mar did, however, in the months prior to commencing the Chapter 11 process, alert all parties of the risks to the resort and the Bahamian people if the construction was not completed on a timely basis and the opening faced a prolonged delay. Prior to the Chapter 11 filing, the contractor still had not indicated when it would complete construction.
As the media has reported, Baha Mar received an adjournment last week from the Supreme Court of The Bahamas until July 20. In this interim period we are committed to engaging in substantive discussions with other involved parties to try to work toward a consensual resolution. In fact, those negotiations have already begun.
It is clear that we, and our government of The Bahamas, recognise the importance to The Bahamas of completing construction and successfully opening Baha Mar as soon as possible. We appreciate the government’s efforts to try to help all parties work together to achieve a consensual resolution in a timely manner. We are also extremely grateful for the support from Baha Mar nation and the Bahamian community, and are touched by the dedication of our employees. As we have said before, it’s at trying times like these when the true value of Baha Mar’s culture shows itself.
Baha Mar’s singular focus is to do all we realistically can to enable Baha Mar to be completed and opened successfully as soon as possible as a world-class destination resort that will attract guests from around the world, and from its success help benefit our economy and the quality of life for all of us in The Bahamas.
Robert ‘Sandy’ Sands is Senior Vice President of Administration and External Affairs at Baha Mar
Comments
JohnBuchanan 9 years, 4 months ago
This pathetic and simplistic, superficial explanation from "Sandy" Sands illustrates why he has become a laughing stock -- a joke -- to journalists in the Bahamas and the U.S. The two key facts he leaves out are: 1) The Chapter 11 process is based on the evidence showing that a company or venture is VIABLE going forward, based on the facts, and 2) If the entity is NOT deemed to be viable (lacking funding, being too far gone in terms of debt, etc.), then indeed liquidation of assets by the court, with that money being distributed among creditors, is the remedy. If the negotiations this week in China were not successful, then the hearings July 20 in the Bahamas and U.S. will begin the end of Baha Mar. The project has been bungled by Sarkis Izmirlian from ther start and the gross incompetence of his "management team" has likely doomed it. And no one deserves to be out of work and disgraced more than the BS artist "Sandy" Sands.
newcitizen 9 years, 4 months ago
That is not at all true. Baha Mar has a lot of options to obtain more financing, from taking on new equity partners, to having someone else buy the debt held by the Chinese Bank. This is precisely why Chapter 11 exists, to investigate those options.
The other option was to let Baha Mar be foreclosed on here in the Bahamas, allowing the Chinese Bank to take control and they would not be required to pay anyone a dime if the liquidated the property for less than what is owing to them. Meaning there is not a chance in hell that any Bahamian creditor would ever get paid anything.
So according to you, if Baha Mar can't show evidence that it can continue to operate (which it has many options at it's disposal), then it will be liquidated, which is exactly what would happen if they had not done this. So why are you complaining that they are attempting to save the project and pay back the Bahamians that are owed money?
Franklyn 9 years, 4 months ago
...disappointing and simplistic view and a poor attempt of misrepresentation of the facts related to the Baha Mar mismanaged and unprofessional business conduct in the Bahamas. The Izmirlian family has created a delusional play of power where the only losers are the Bahamian people. "Sandy" Sands can hold to his position or rational on the Baha Mar Chapter 11 filing but please don't expect small Bahamian businesses that are owed 1000's of dollars to give sympathy or any form of support for Baha Mar's current dilemma, now that it is clear that Baha Mar has no interest in settling bills owed to Bahamians. ...for me, it is looking more and more unlikely that I will ever recover the $56,000 owed to my company.
newcitizen 9 years, 4 months ago
The Chinese Bank would be foreclosing on Baha Mar right now if the Chapter 11 hadn't been filed. Do you really think that the Chinese Bank would be paying you a cent? Your best bet for getting paid your money is with Baha Mar coming out the other side of Chapter 11.
Entering Chapter 11 does not mean that they no longer owe any money. It just means that the debtors can't ask for the money right now. They just have to wait till it exits from Chapter 11, and then they can ask for their money.
Franklyn 9 years, 4 months ago
there is a submission for Chapter 11 ...pending approval of the Bahamian Courts!!! and that will not happen. maybe a little late to enter this debate on this issue, now that Christie has outline what the future of Baha Mar will look like in the coming months ...but you are obviously uninformed of the details submitted at Court in Delaware ...please read - https://cases.primeclerk.com/northshore/ read and understand ...:- Motion to Pay Critical Trade Vendor Claims Debtors' Motion for Entry of Order (I) Authorizing Payment of Critical Vendor Claims in Ordinary Course of Business.
In answer to your question: my company provided direct service to Baha Mar Ltd. and not work as a CCA contractor ...so your emotional assertion is miss placed and I see no other side for a "Izmirlian Baha Mar" in the near future.
newcitizen 9 years, 4 months ago
Well Franklyn, I feel for your loss. I think with what Christie pulled last night you are truly out of all the money you were owed.
The information you submitted regarding the case in Delaware is to pay critical supplier during the Chapter 11 proceeding, it does not mean that those are the only people who can now claim a debt against them. You would have just had to wait till they exited on the other side. Now there is no exit, and the money you are owed is about as good as gone.
I very much hope I am wrong and you get paid though. It's certainly not fair for the people who actually built the place to be the ones who are left holding the bag.
saysomething 9 years, 4 months ago
It is SAD that front man for Baha Mar,had the slightest inclination what CHAPTER 11 entailed and truly consist of..... this VP really needs to be the first to GET LAID -OFF.....
Facts 9 years, 4 months ago
Sandy let's bring the facts; on one side Izmirlian family says that they believe in success of Bahamar. If they do then why they need Chapter 11 protection to put money in the project; This secure their funds and put them ahead of all secured or unsecured creditors. Bank does not have any interest in foreclosing the business if the business is viable. Ship Captain does not blame the ship mate for sunk ship. Izmirlian and BML management had 3 years to see the problems and fix it. Stop blaming Contractor and Bahamian government. Izmirlian as Bahamar Ship Captain should gracefully accept their failures and step down for betterment of the project. Let CCA and Exim Bank restructure the project and open the doors. As far as the Bahamar employees; Bahamar their own chapter 11 filing allowed for severance pay; this show Bahamar intent. I think you should communicate this to your employees that regardless of Chapter 11 approval or disapproval by Bahamian court; you intent to let them go. This way at least they can look for another job or make alternative arrangements.
Bahamian creditor might have better chance to get paid by Chinese Bank than Bahamar simply because they want to open the hotel and have the funding to do so; contrary to Izmirlian just want to gamble with some one else money.
ThisIsOurs 9 years, 4 months ago
Hmmm...I thought there would be more to the article, being objective it doesn't have much depth and everything here has already been discussed. That said I hope they get the time needed to reorganize and soon!
EnoughIsEnough 9 years, 4 months ago
newcitizen i agree with you wholeheartedly. i'm happy that baha mar finally put out an explanation so that all the "patriotic" bahamians, who were up in arms because their egos are out of joint about why Baha Mar went to the U.S, will finally understand. However, even with this simplistic explanation people seem to be clueless. Chapter 11 was the best thing to do in order to buy Baha Mar time and to still keep (hopefully) Bahamian employees. Our government and courts would be best to stay out of what they don't understand and can't handle. Too many naysayers that for whatever reason seem to want Baha Mar to fail when it's come this far. i can't help but wonder what they want to happen to the buildings should the resort never open.
Franklyn 9 years, 4 months ago
...new owners! who have the experience and management skills to make the right decisions and not a spoiled son who has charmed a few gullible Bahamians who have enjoyed a few years at the blue party in the Izmirlian dream world now nightmare. Baha Mar will be a success but the blue party has come to an end. The Bahamas will be a success, as it should, and the Bahamian people will be a success, as they should ...with the help of The Chinese of cause ;)
Well_mudda_take_sic 9 years, 4 months ago
Dream on my friend....the Chinese are the last one's you will get a dollar from.
DEDDIE 9 years, 4 months ago
If I was Bahamar I would have done exactly what they did. The key question I would have ask, "can you point to me a company that has been successfully reorganized under Bahamian law". We can't even liquidate properly(Clico and Gulf Union). The only person who gains from our system is the receiver who continue to receive his payment before all other claims. All you have to do is ask the receiver for Clico who continues to collect a handsome fee.
sheeprunner12 9 years, 4 months ago
How much money are we now paying Sandy to talk foolishness like this .................... $20K per month??????
MonkeeDoo 9 years, 4 months ago
DEDDIE is right and the rest of the money will be gone soon if PGC gets what he wants. It will be interesting to see if the judiciary is impartial and deals with matters on a first come first served basis.
TheMadHatter 9 years, 4 months ago
Mr. Sands - you are much too intelligent to be here. Please grab your passport and personal belongings and go quickly to New Zealand, Canada, Switzerland, Japan, Austria, or some other civilized place.
Best wishes.
TheMadHatter
Well_mudda_take_sic 9 years, 4 months ago
Baha Mar and Sarkis Izmirlian had better be very careful about what information flows the way of Robert "Sandy" Sands......whatever is said to him will surely make its way to Christie's ears! Like his father Basil, free mason lodges and the PLP rank high above all else except self!
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