The Tribune

WHAT an unmitigated disaster – the Baha Mar dream is over and 2,000 redundant Bahamian employees have been sent home to face a bleak Christmas.

“Prime Minister Perry Christie has responded with disappointment for the affected Baha Mar employees and their families at the action taken by the joint provisional liquidators in making some 2,000 employees redundant,” a statement from the Office of the Prime Minister said yesterday.

“This arises from the insolvency of Baha Mar and the protracted exercise to secure a negotiated settlement,” said the statement.

Why should the Prime Minister be surprised and why should he be disappointed by the action taken by the joint provisional liquidators — after all, weren’t he and his Attorney General the two strong advocates for liquidation? And wouldn’t we have sacrificed our precious sovereignty if we had by-passed our own courts for a more flexible Delaware bankruptcy court that assured Baha Mar and its creditors more protection? So why should he be surprised when the liquidators have done the job for which the court appointed them? At all cost, they had to protect the assets. The staff, who had special training to service the hotel, had been retained on full salary against the day of the grand opening. When there was no more money to continue payment, the liquidators did their job — they protected the assets. To do this, unnecessary cargo had to be jettisoned. Unfortunately at Baha Mar this was the staff.

So why should Mr Christie be disappointed in either the judge, or the liquidators? This, Mr Prime Minister and Attorney General Maynard-Gibson, is what liquidation is all about in The Bahamas. And come November 2, unless intense negotiations can rewrite the final chapter in this tragic drama, the court will be forced to administer the final blow. This would result in the already closed hotel being put on the market at whatever price it might bring, and whatever is made on the sale would be divided among the creditors. In such a transaction, as all business people know, debts are never fully recovered. So nobody wins in liquidation in a Bahamian court.

Also with all of the bad publicity that this liquidation has attracted and the prominent role that government has played in what led up to today’s announcement, there are many investors who would not consider Baha Mar a good or even manageable investment. All we hear among investors today is the word “nationalisation”. Government might not like the sound of such an evil word, but today many persons no longer believe that The Bahamas is a safe place for investment.

On July 16, Mr Christie told Bahamians that he was convinced that liquidation was the right path, one, he said, “that will lead to the completion and opening of Baha Mar in the near future”. He added that his government “will continue to be guided by what we honestly and truly believe to be in the best interests of the Bahamian people”.

Unfortunately, this guidance has not, so far, been in the best interest of anybody.

Liquidation in The Bahamas ends in the winding up of a business. It provides no safeguards to give a business person a chance to rebuild his business, turn a loss into a profit and eventually pay off his creditors.

It was very early in the year when the $3.5 billion Cable Beach resort, which promised to be the largest and most luxurious in the Caribbean, started to miss its opening dates. Apparently the contractor — China State Construction (CCA) — was responsible for setting – but missing — completion dates. After international rave reviews were being written in anticipation of the opening, embarrassment on not opening on time set in, questions were being asked and seeds of doubt were being sown. Baha Mar was getting an unfortunate reputation even before it had a chance to display its magnificence to the public.

The next we heard, CCA staff had downed tools and walked off the job.

Apparently, developer Sarkis Izmirlian had a serious talk with Prime Minister Christie explaining to him that there was a financial crisis. We don’t know the Prime Minister’s reaction, but obviously he did not grasp the seriousness of the situation. Mr Izmirlian made it clear that the resort did not have a “sufficient source of revenue to continue” the existing business. At the same time, government owed the resort several million, but the Deputy Prime Minister was quibbling over payment. In the end, it was this money that was used to pay the 2,000 staff who were made redundant yesterday because that money was now exhausted.

On June 9, with no other choice, Bah Mar’s Board of Directors then announced the decision to go into voluntary liquidation under Chapter 11 of the US Bankruptcy Code in Delaware.

In such a situation, we wrote in this column at the time, it was the smartest move that the directors could make. Secrecy was of the utmost importance. But it was this secrecy that rattled the nerves of government, and so miffed the Prime Minister that he questioned whether Mr Izmirlian was still of sound mind.

What Delaware had to offer, would not only have protected the resort, but all of its creditors and given it a chance to rebuild and, if successful, eventually pay its creditors 100 per cent of what they were owed. The Bahamas could only liquidate and shut down, it could not offer what Delaware could. But, no, although the Delaware court offered to work with our court, even to do this Mr Christie considered that we would be sacrificing our sovereignty. When we hear this word “sovereignty”, it recalls a conversation with the late Dame Eugenia Charles, prime minister of Dominica, a brilliant lawyer, who respected sovereignty, but also recognised that when it came to making a choice between sovereignty and the good of her people, sovereignty would not put peas in the pot.

However, Prime Minister Christie chose sovereignty and the Bahamian courts. Today, about 2,000 Bahamians who lived in hope that by the end of the year their dream hotel would be open and they would be serving many visitors, have been made redundant.

“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,” was the only promise held out in yesterday’s press release.

We wonder how many Bahamians still agree with Mr Christie’s assessment in June that liquidation in the Bahamas was the right path – a path that would “lead to the completion and opening of Baha Mar in the near future”?

We think not, but, of course, this was what we thought when the argument was first raised. If we had gone the Delaware route, Baha Mar would have been opened and thriving by now.