By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
The Government’s Baha Mar ‘liquidation strategy’ was yesterday branded “a complete disaster” by a former Board director, after the Supreme Court authorised the termination of 2,026 employees.
Dionisio D’Aguilar told Tribune Business that the $3.5 billion project was “falling apart” and in total meltdown because the Christie administration had elected to oppose the bid by Sarkis Izmirlian, its developer, to reorganise via US Chapter 11 bankruptcy procedures.
He argued that the Government had been “bamboozled” by Baha Mar’s contractor, China Construction (America), into thinking it would team with the China Export-Import Bank to “ride to the rescue” - something that has not happened to-date.
And Mr D’Aguilar suggested that neither the Government, nor the Chinese, appeared to have a plan that would ensure Baha Mar was completed and open in the quickest possible time - a development that would protect Bahamian jobs and act as a major stimulus to this nation’s economy.
Mr D’Aguilar, a former Baha Mar director, was reacting after the court-appointed joint provisional liquidators obtained Justice Ian Winder’s permission to terminate “up to” 1,442 ‘non-active’, and 584 ‘active’, employees at the Cable Beach-based development.
With the seven Baha Mar companies insolvent, and unable to continue paying their salaries, the Supreme Court consented to the terminations on the basis that their continued employment “would not preserve the assets” of those entities - the very opposite of what the joint provisional liquidators have been tasked with achieving.
The ‘en masse’ terminations are another blow for the Government, and a severe embarrassment and ‘egg on the face’ for the Prime Minister and senior Cabinet ministers, who in early July repeatedly promised that their ‘winding-up’ petition strategy was the fastest, and best, route for Baha Mar’s speedy completion and opening.
One Baha Mar worker, speaking on condition of anonymity, told Tribune Business: “The Government will try to put a pretty spin on it, but it promised results it couldn’t deliver.”
The firings are also a strong indicator that the joint provisional liquidators are unlikely to mediate a successful commercial resolution between Mr Izmirlian, the Chinese entities and the Government by November 2.
That is the date when the Supreme Court is scheduled to hear the petition to place the key seven companies within the Baha Mar group into full liquidation, an event that, while described by the Prime Minister as a “chilling prospect”, appears increasingly likely to happen.
Mr D’Aguilar, meanwhile, told Tribune Business that the 2,026 terminations were proof that the Government’s strategy of forcing a rapid resolution to the Baha Mar dispute via a court-supervised liquidation process was a total failure.
“This whole liquidation process is a complete disaster. I don’t know what they thought was going to happen,” Mr D’Aguilar said of the Christie administration.
“I didn’t ever get what they were trying to do by taking it through this liquidation process. You had a developer willing to put it into Chapter 11, put more money into it, and now they [the Government and the Chinese] have no plan.
“They were all united in fighting against Baha Mar, and now they don’t have a plan. It’s not working. They [the joint provisional liquidators] don’t have money, and they’re laying people off.
“They felt the Chinese would ride to the rescue, but that’s not materialised. It’s a big disaster.”
This theme was echoed, albeit more subtly, by Mr Izmirlian in a message to his now-former terminated employees.
The Baha Mar developer, in an obvious dig at the Christie administration, said it was “a moment to ponder the validity of decisions” made to oppose Baha Mar’s efforts to reorganise under US Chapter 11 procedures.
While Baha Mar would likely still have lost the verdicts in both the Supreme Court and Delaware Bankruptcy Court, it is questionable whether CCA and the China Export-Import Bank would have been as aggressive in their legal and negotiating tactics without the Government’s overt support.
“Perhaps this would be a moment to ponder the validity of decisions made to oppose Baha Mar’s Chapter 11 filing, and to push forward with the appointment of the provisional liquidators, setting Baha Mar on its current path,” Mr Izmirlian wrote.
He conceded quickly, though, that such analysis would be of little help to the 2,026 Baha Mar employees left without a job.
“I am writing to you with a heavy heart,” Mr Izmirlian said. “Despite all our efforts and hard work, the day we have hoped would never arrive is here, and the liquidation process has forced very significant workforce reductions at Baha Mar.
“The unfortunate truth is that with Baha Mar still not completed, no concrete resolution in place, no confirmed funding source, and without the benefit of binding the parties into a proven reorganisation process, there is simply no way for Baha Mar to sustain the thousands of jobs that are being cut today.”
Mr Izmirlian was also downbeat, and seemed less than optimistic, on the prospects for a successful resolution to the dispute between himself and his Chinese partners by November 2.
“Whilst there are still ongoing conversations with all parties aimed at finding a solution to be able to finish and open Baha Mar, it is very difficult to predict where these will lead,” he wrote.
“As such, I am not able to tell you what the future holds for us.”
Mr D’Aguilar added that “time will tell if Chapter 11 would have provided a meaningful structure of reorganisation”.
“Without that structure, it’s all falling apart,” he argued. “It’s outrageous, it really is. The Bahamas Government has been ambushed by the two Chinese entities.
“They have been bamboozled by CCA, and thought by supporting them they’d save the whole payroll and make it look good. They should have let Chapter 11 proceed.”
Under those procedures, Baha Mar would have been able to reorganise while enjoying full protection from the Government, Chinese and all its creditors.
This was blocked, which also resulted in Mr Izmirlian being prevented from providing $80 million in financing to carry Baha Mar through the Chapter 11 duration. That financing would have lasted for a year, and prevented lay-offs such as yesterday’s termination decision.
Tribune Business understands that the joint provisional liquidators have only been able to raise $9 million of the $25 million in financing they were seeking to cover costs incurred during their appointment (see other article on Page 1B).
While the China Export-Import Bank forwarded just over $9 million to cover Baha Mar’s due property insurance premiums, the remaining $16 million balance has proven elusive.
Tribune Business sources also confirmed that just 350 Baha Mar employees remain on-staff, working to help preserve and maintain the $3.5 billion development’s resort properties and other assets.
The joint provisional liquidators, Ed Rahming, the Bahamian accountant and partner in KRyS Global (Bahamas), and UK duo, Alastair Beveridge and Nick Cropper of Alix Partners, were represented by attorneys Raynard Rigby and Megan Taylor at yesterday’s hearing.
Mr Izmirlian was represented by Roy Sweeting, partner in Glinton, Sweeting & O’Brien. Yet Justice Winder’s Order shows that the Government, the architect of the whole liquidation/winding-up process, was not represented.
“Though today’s layoffs are difficult on everyone, it further highlights the urgency for everyone to remain at the negotiating table and maintain the dialogue that may lead to a resolution, a re-start of construction and the completion of the Baha Mar project,” said Mr Rahming in a statement.
Baha Mar staff were advised of their status by notice to their individual e-mail addresses or communication from supervisors.
“We were paying housekeeping staff when there was no housekeeping to do, spa staff when there was no spa, casino staff when there was no casino to operate,” said Mr Beveridge.
“Thanks to monies that were made available to us by the Government from funds that were due to Baha Mar for road construction works, we were able to keep these staff members on as long as we did.
“We know that they have obligations, that many of them gave up other jobs to join the Baha Mar dream team, and now we are continuing to focus on how best to make that dream a reality.”
Management and staff who were made redundant are being offered assistance in development of CVs and resumes, and in job-hunting.
Staff members were retained to provide assistance in job skills development and life skills, with employment workshops scheduled to run from October 29 to October 31.
Comments
Well_mudda_take_sic 9 years, 2 months ago
Maynard-Gibson was overheard telling news reporters that the lay offs are the fault of the liquidators of Baha Mar and not the government. Simply unbelievable!
GrassRoot 9 years, 2 months ago
I hope these 2000 will not vote for the PLP.
GrassRoot 9 years, 2 months ago
all these stupid braingasms. very simple: the liquidators will continue to administer a titanic. no later than there are not enough funds to pay the liquidators' fees, the white elephant will be released into the wild. if this shop is not opened there will be NEVER, NEVER money to cover the cash flows needed to preserve even the status quo.
DEDDIE 9 years, 1 month ago
The liquidators and lawyers will be paid no matter what. They always make provision for themselves,
Honestman 9 years, 1 month ago
Perhaps we are being a bit unfair on Mr. Christie and his cabinet. I know that since they came to power in 2012 they have:
But hey, let's give them a chance. I'm sure they will get it right with NHI !!
Greentea 9 years, 1 month ago
You forgot- Introduced VAT without the reduction in customs duties as proposed.
digimagination 9 years, 1 month ago
Future foreign investments in the Bahamas (Chinese excluded) by high net worth individuals? Doubtful, very doubtful because the word is out!
MonkeeDoo 9 years, 1 month ago
“Thanks to monies that were made available to us by the Government from funds that were due to Baha Mar for road construction works, we were able to keep these staff members on as long as we did.
I don't know if people are just plain stupid, and assume that Mr Beveridge made this statement and further assume that he is involved with the JPL boys but the money that Government diverted to pay these people REMAINS A DEBT PAYABLE TO BAHA MAR. The Government has absolutely no power to set off such a debt and instead pay it out to whomsoever it please. Doesn't the JPL people understand this. That money is an asset that they should be collecting NOW !!!!! LORD HELP US WITH THIS INSANITY !
asiseeit 9 years, 1 month ago
This disaster is on the government, straight, plain, and simple. We are ruled by incompetents!
GrassRoot 9 years, 1 month ago
Maybe Shame Gibson should run the unemployment numbers as he did during the Carnival -...
Well_mudda_take_sic 9 years, 1 month ago
Ceasar's Palace in Las Vegas is in Chapter 11 bankruptcy, yet has managed to avoid laying off most of its employees and is now undergoing a $75 million upgrade of its property. Meanwhile our PM has forced Baha Mar to be liquidated in the Bahamas to enrich his lawyer friends and other political friends and business cronies in the private sector at the expense of poor Bahamians in desperate need of jobs. The Baha Mar Citizens and the rest of the Bahamian people got royally bamboozled by Perry Christie, Allyson Maynard-Gibson, Damian Gomez and Baltron Bethel because of the back-room deals that have been cut by the Christie led-PLP government with its new corrupt Chinese friends to swindle the Izmirlian family out of $900+ million for the benefit of themselves and certain key senior executives of the China Construction Company of America (CCA) and the China Export-Import Bank! The four Bahamians I have named here are evil beyond comprehension when it comes to them looking out for their own selfish greedy corrupt needs at the expense of the people they were elected to serve!!
http://news.yahoo.com/caesars-palace-tu…
paul_vincent_zecchino 9 years, 1 month ago
Well said, thank you for stating the truth.
paul_vincent_zecchino 9 years, 1 month ago
Mr. Izmirlian seems to be dealing with and in reality. His idea of Chapter 11 remains sound, as you say the whole idea of Chapter 11 is for the business to remain open in order to keep its employees on the roles as it restructures its liabilities.
Mr. Izmirlian clearly seems the target of a Constructed Fraud orchestrated by the chicoms and local interests.
paul_vincent_zecchino 9 years, 1 month ago
Add chicoms, who always arrange to grab the best end of the deal, to plp.
Can it get worse? Do you really want to know how much worse?
BaronInvest 9 years, 1 month ago
It will get worse. The chinese do not want to negotiate at all.
It's in their best interest if the whole thing gets shutdown, everyone fired and sold to the highest bidder. Sarkis will loose his 800m share to the highest bidder and guess who that will be ? The chinese of course. Then they own the resort by 100% - and will need employees again - chinese employees ... The game is completely clear at this point. Your government is paid already for this move so they won't have to worry ...
Bahamar will open Early 2017, just not with Sarkis or any Bahamians.
Wideawake 9 years, 1 month ago
It will be interesting to see what options remain for Sarkis assuming that Winder winds up. Can more legal action delay or thwart this action? Can Winders ruling be appealed and re-appealed ad nausea to stretch the final, final decision until after the next election? Would our next government be more "Sarkis-friendly" that PGC's hapless crew???
If you get screwed out of $800 million how do you seek revenge??
This saga is by no means over, but meanwhile the Bahamian people suffer, the corrupt members of government try hard to enjoy their ill-gotten gains as they worry about the result of the next election, which is only 18 months away, and what Commissions of Enquiry they will be called before!!!!
You couldn't make this stuff up!!!!
BaronInvest 9 years, 1 month ago
I think there are no remaining options. The plan is set so it doesn't really matter what he does. It's a matter of lacking respect, the government already shown they don't respect him or his investment, even all the prime ministers lackeys told him so in the public - remember psychological tests for investors or taking the residency away ?
These people got their own agenda and it's certainly not serving the country for the greater good.
paul_vincent_zecchino 9 years, 1 month ago
It would seem the chicom government is establishing its beachhead almost within sight of the former RAF transmitting station on the west shore of Lake Killarney of Fire Trail Road.
And now with the Pointe arising adjacent to the old British Colonial and within clean eyeshot of the American Embassy, the symbolism - and chicoms love symbolism - is impossible to miss.
Wideawake 9 years, 1 month ago
Another thought; assuming The Bahamas is down graded again, which seems likely, and if the B$ is devalued, then Baha Mar might, once again, become a viable option for purchase by overseas investors with overseas currency!
However, how would they make an operating profit if they have to use de-valued B$ to purchase supplies from the USA???
Obviously they would have to charge US$ equivalent room rates to enable them to purchase US supplies, but of course, Bahamian employees would be paid in B$ and then would struggle to afford higher food prices at the local supermarkets????
DEDDIE 9 years, 1 month ago
The B$ can not be devalued because it is not traded internationally. It is artificially peg to the American $. What the IMF could do if our economy becomes a mess and we invite them in is compel our government to allow the B$ to trade and then we will see a free fall of the B$.
banker 9 years, 1 month ago
There is a devaluation scenario with the peg. Right now, to enable the peg to remain on par with the American dollar, the Central Bank keeps reserves of dollars and instruments denominated in American dollars.
If the world financial community decides that the economic output of the Bahamas requires double, or triple, or even ten times the amount of American dollar reserves, and we cannot come up with the money, then the peg will be at a fraction of the American dollar instead of at par. That is how devaluation will work.
Baha10 9 years, 1 month ago
Unfortunately, this is the result when people with no, little or failed business experience get in over their heads in spending money they never earned, in this case Daddy's, and then get upset that they were denied the opportunity to avoid Creditors who lent them money by exploiting US Chapter 11 procedures, which if allowed, would be akin to fraud.
SP 9 years, 1 month ago
......................................................... Legacy .............................................................
SP 9 years, 1 month ago
........................................... Weapons Of Mass Destruction ...........................................
http://tribune242.com/users/photos/2015…
TalRussell 9 years, 1 month ago
Baha Mar's debacle. VAT, Weather Radar working or not working, PLP party's convention cancellation, who will lead which party going into the 2017 General - all pails in scale my dear Comrades, where few, if any of you, bloggers are paying attention to the real storm going on in Freeport.
We seem pay more attention to, will there be or not be a Carnival 2016?
We sure as hell gone mixed up we priorities.
Who will emerge as the NEW owners of a city they can as Wallace groves did - call Freeport their very own private domain. Where they will continue the onward, forward policy in place since the 1950s to rule over the natives.
Looks to me likes the colonialists were never displaced but replaced.
Hard believe we go around calling our Bahamaland an independent nation.
MonkeeDoo 9 years, 1 month ago
banker: Look at the Jamaican Dollar today ! Post IMF intervention. The Greeks are sucking it up heavily now. Pinocchio has led us into the very jaws of the IMF.
banker 9 years, 1 month ago
Exactly. My original point was that the dollar would not float. It would still be pegged to the American dollar but not 1 to 1. It would not be a convertible currency and not be traded on the world currency markets. There would be no value to that, and it would be traded at levels of a few cents to the American dollar. With the currency reserves and a peg, it would probably fall to about 30 cents, or about three Bahamian dollars to one American dollar. And that by no means would be the floor. It could go lower.
I would go for dollarizing the economy and throwing out the Bahamian dollar and making the American dollar the currency of the Bahamas. Dollarization has worked well and not so well. It has worked in Ecuador and not worked so well in El Salvador. However there have been other mitigating factors in El Salvador, such as galloping inflation. It would work in the Bahamas because of the tourism influx of American dollars.
MonkeeDoo 9 years, 1 month ago
banker: To dollarize the Government would have to be able to convert one for one, and they just don't have it. We are in the Cloud as the young people say.
banker 9 years, 1 month ago
... or reduce the money supply, which also would not be very good for the average Bahamian. Generally, when dollarization occurs, an exchange rate is established, and you can bet that it won't be one to one. There will be immense pain for the common people, but it can be a very handy implement as the government can reduce crippling domestic debt by devaluing the Bahamian dollar. They can cut it in half with a judicious devaluation. Unfortunately the price of groceries would skyrocket, and crime would probably increase in the short term. However in the long term the country could get back on its feet with economic diversification denominated in American dollars.
MonkeeDoo 9 years, 1 month ago
Nevertheless I agree and Turks and Caicos is doing real fine with their USD base. But they got rid of the lunatic fringe in Government. We haven't yet.
TalRussell 9 years, 1 month ago
Be ever so currency careful what you wish for.
Comrades what's next on your Bahamian Dollar (BSD) agendas?
Is it to have our dollar move away from the US Dollar (USD) and to require the banning of all US dollars from circulation in the economy?
Maybe you would require ALL tourists to exchange their USD currency upon entry Bahamland?
Maybe we go the way of the Chinese who have three currencies in circulation as we blog?
The mighty BSD has before actually been worth more the the USD.
banker 9 years, 1 month ago
Oh stop the ignorant foolishness -- banning the Bahamian dollar. Have you ever been to the Cayman Islands? You can pay either in Caymani dollars or American dollars. And the store clerks are literate enough to the do the conversions on the spot. Each cash register has a handy little calculator next to it that the clerks use.
Well_mudda_take_sic 9 years, 1 month ago
Just think how much Christie and his family have pocketed from allowing Communist Chinese to build their state owned development known as The Pointe within extremely close proximity to the U.S. Embassy in the Bahamas. While Red China is constructing The Point, they will build into it the very latest state-of-the-art intelligence gathering technologies in order to snoop in on just about any and every things that goes on at or passes through the U.S. Embassy in the Bahamas. Fred Mitchell apparently told Perry Christie sometime ago that the Bahamas needs to teach the U.S. a lesson or two, and Christie agreed this was the case. Seems the Christie-led PLP government is fed up with U.S. policies aimed at detroying or hurting both our tourism industry and our financial services sector, e.g. negative travel alerts by the U.S. Dept of State, downgrading of Bahamas credit ratings by U.S. controlled interests like S&P and Moody's, the unfavourable policies proposed by the U.S. controlled IMF, World Bank and IDB that only serve to increase our national debt, the recent blacklisting of our banking sector from Washington D.C., the imposition of FATCA by the IRS/U.S. Dept of State, etc., etc., etc. Christie and Mitchell both still believe they have little choice but to curry great favour with Red China so they no doubt had Allyson Maynard-Gibson and Baltron Bethel seal The Pointe deal with the appropriate government officials of Red China for the purpose of sticking a finger in the eye of the U.S. Government. The Obama administration and their lack luster dim witted Secretary of State, John Kerry, have yet to figure out the severity of what is going on down here in the Bahamas and the extent to which U.S. security interests are being terribly compromised by ongoing espionage attacks of Red China on the U.S. Embassy in the Bahamas. The U.S. is being subjected to ever increasing Chinese cyber-warfare from within Nassau (just across the street from the U.S. Embassy), just a mere 180 miles away from the coast of South Florida. Wow! One really has to wonder who's dumber....the Americans or the Bahamians!!
Chucky 9 years, 1 month ago
Why is everyone talking fool about the BSD. Nothing can be accomplished by fooling / chaining the currency situation.
Wanna fix the problems, then throw out all the thieves, out of government and throw them in jail, then go after all the crooked business people and lock them up.
Then and only then can we begin to build a sustainable economy.
I'm really surprised the poor gangsters shooting poor gangsters is the only murder problem here. One day, people might aim at the real criminals, and then the bullets will start piercing the flesh of those who really deserve it! I wouldn't want to be on either end of a gun shot, but can't say I'd be surprised if shooters start shooting at different targets????
banker 9 years, 1 month ago
The currency talk is about saving the Bahamian economy now that tourism as well as Foreign Direct Investment is collapsing. There was a slowdown of FDI, and now that the world knows what happens to foreigners who invest thanks to the dunderhead criminals Christie, Mayonnaise-Gibson et al, they know that they cannot trust their money to the Bahamaland with those slimey b*stards in power.
MonkeeDoo 9 years, 1 month ago
I guess Christie will Dissolve Parliament right after Winder passes judgement on November 2nd. He nor anyone in the PLP can possibly offer to represent anyone in the Bahamas again much less offer to form another government. The PLP must be disbanded now, as a totally failed concept. It has had its day but can no longer serve anyone. The FNM and DNA will have to duke it out with whatever independents are prepared to serve, and see where we get. Whoever gains a majority must pledge to investigate the corruption and criminal negligence that the PLP have visited on the Bahamian people. And whoever is found wanting MUST pay the price ( Jail with NO BAIL) and when the proceeds are found ( and they can be ) they must be confiscated. This Country cannot continue anymore in the mode that it is in. They can either go willingly or have it taken back by the people and that won't be pretty.
BahamaPundit 9 years, 1 month ago
Can anyone explain to me how filing Chapter 11 in the US could have saved Baha Mar and prevented the 2K layoffs? I just can't see how it would have made an ounce of difference, other than perhaps prejudicing Bahamas based creditors and bringing any corrupt dealings between the Chinese and Bahamas Government to light.
banker 9 years, 1 month ago
The explanation is very long, but it would have saved the project. It allows the project to carry on, in spite of being broke. Izmirlian was going to inject the necessary money to keep it going while finding other financing to complete the project.
Baha10 9 years, 1 month ago
As BahamaPundit correctly summizes, at the expense of Creditors who either lent money or provided services to enable the Project to progress to this point in the first place. Why should these people be the ones to suffer the "haircuts" to allow Izfailian to continue with his doomed Project?
SP 9 years, 1 month ago
................................................ @ BahamaPundit ..............................................................
If at first you are unable to understand below article. Remove yellow shirt and read again.
http://news.yahoo.com/caesars-palace-tu…
MonkeeDoo 9 years, 1 month ago
BahamaPundit: I think that the key benefit ( for Izmirlian ), in retrospect, was to prevent / delay the mortgagor ( China Exim Bank ) from getting the majority shares in the project. These had been conditionally signed over by Izmirlian, should the project become insolvent. Therefore EXIMBANK will be the defacto owner of Baha Mar,and it is unlikely that there will be any liquidation come Monday next. EXIMBank will recapitalize the project ( as owners) and begin to complete it with CCA, who will be their partner. I think that is perhaps why they would not LEND Izmirlian any more money. This is the final squeeze play in this drama.
BahamaPundit 9 years, 1 month ago
Now this is an excellent response. Thanks.
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