By NATARIO McKENZIE
Tribune Business Reporter
nmckenzie@tribunemedia.net
Attorneys representing Baha Mar’s major creditors yesterday argued that the developer had “started on the wrong foot” in seeking the Supreme Court’s recognition of its Chapter 11 bankruptcy protection filing in Delaware.
Attorneys for the China Export-Import Bank, China Construction America and the Government called for its bid to give Chapter 11 legal effect in the Bahamas to be dismissed, blasting the application as “misconceived” and “unprecedented”.
Brian Simms QC, who appeared on behalf of the China Export-Import Bank, argued before Justice Ian Winder that Baha Mar had gone forum shopping when it filed in Delaware.
Mr Simms, head of litigation at Lennox Paton, argued that Baha Mar was asking the Supreme Court to apply US law, and not Bahamian law, in approving the application for recognition.
“They started on the wrong foot. They ended up with a misconceived and unprecedented application which makes no sense in law and cannot stand,” said Mr Simms.
“The fact that they submitted to a Delaware court does not give them the right to be recognised here.
Mr Simms argued that the common law practice of recognition is no longer applicable, and there is no law to assist in this situation. He added that common law allows for the recognition of insolvency proceedings taking place in the country of incorporation.
Mr Simms also argued that the Government’s winding up petition prevents the recognition of any Chapter 11 process, citing that once a winding-up petition has been filed the court becomes seized with the matter and it has to become the main proceedings.
Mr Simms also argued that Baha Mar’s application was effectively seeking an injunction against the bank, Baha Mar’s $2.45 billion debt financier, from exercising the rights it may have via the loan security.
He described Baha Mar’s application as “unprecedented” and having no basis in law, arguments that were adopted by the other non-Baha Mar attorneys.
Minister of state for legal affairs, Damian Gomez, who appeared on behalf of the Government, argued that the only court which can dissolve a company incorporated in the Bahamas is the Supreme Court.
Mr Gomez said it appeared as though Baha Mar was not satisfied with this nation’s insolvency laws, and as a result filed for Chapter 11 bankruptcy protection in Delaware.
Lester Mortimer QC, who appeared on behalf of Cable Bahamas, which became a party to yesterday’s proceedings, told the court that the BISX-listed company under the US order was required to continue to provide services to Baha Mar.
Mr Mortimer said the provision of services and equipment was costing Cable Bahamas some $90,000 a month, but the US court only made provision for $75,000 a month - although an adjustment could be sought.
Sean Moree, attorney for China State Construction Bahamas, said it was “perverse and contrary to public policy to recognise foreign proceedings as opposed to a foreign representative”, namely the company Northshore Mainland Services, which had been designated as the foreign representative.
“It could lend to mischief. It has never been done before. It would be wrong and contrary to law. This was a calculated and unjustified act of forum shopping. The application is misconceived,” said Mr Moree.
Comments
Well_mudda_take_sic 9 years, 3 months ago
Hollow arguments from Simms and Moree when you consider that Baha Mar had little choice but to file for protection under Title 11 of the U.S. Bankruptcy Code because no similar protection is afforded under the insolvency laws of the Bahamas. Our insolvency laws as applied to companies are much more similar to Title 7 of the U.S. Bankruptcy Code which deal with the liquidation and eventual dissolution of a corporate enterprise. There is nothing illegal, misconceived, unprecedented or unjust about Baha Mar's filing under Title 11 filing in Delaware. Similar protections do not exist under Bahamian law and without them Baha Mar is a doomed project because much of its value would be destroyed upon the appointment of a liquidator, whether provisional or official. For Minister of State for Legal Affairs, Damian Gomez, to argue that the only court which can dissolve a company incorporated in the Bahamas is the Supreme Court perhaps says it all, i.e., our government just doesn't care whether or not Baha Mar ceases to exist!
Reality_Check 9 years, 3 months ago
The debtor in possession restructuring under the Chapter 11 bankruptcy protection filing in Delaware would take much less time than liquidation proceedings in the Bahamas and during that time the creditors would be kept at bay; hence the word "protection". No such protection is allowed for in a liquidation under the insolvency laws of the Bahamas. Being the largest single creditor by far, the China Export Import Bank alone could easily force the complete winding up of Baha Mar in a liquidation supervised by the Supreme Court of The Bahamas. This would have the effect of unjustly destroying the equity value of the Izmirlian family's investment in the 97% complete Baha Mar project, currently estimated to be worth circa US$800-900 million. The argument that a foreign court cannot dissolve a company incorporated in the Bahamas is specious because any foreign court could, if necessary, make application to the Registrar of Companies for this to be done once all the requirements for doing so have been met.
Baha10 9 years, 3 months ago
"Baha Mar" as we know it is done as the Rich Kid has relied on fellow privileged Social Climbers who were happy to take his money and drink his champagne, but have little political influence and are further now completely out gunned by better lawyers and advisors. Simple lesson in life, "choose your friends wisely", especially in a small Town, a lesson the Rich Kid has had to learn the hard way at tremendous expense and embarrassment to his Family.
Sign in to comment
OpenID