The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Baha Mar yesterday pushed forward with its Chapter 11 plans by seeking US court permission to appoint a ‘chief restructuring officer; while Bahamian attorneys spent a second day attempting to thrash out the powers its joint provisional liquidators will possess.

Sources close to the developer told Tribune Business last night that Baha Mar had yet to receive the Supreme Court Order setting out these powers, and suggested this was likely due to the ongoing haggling between attorneys for all four parties to the dispute.

“All the parties have to agree, and when you have four sets of attorneys involved that’s likely to take some time,” one contact familiar with developments told this newspaper.

Although Justice Ian Winder last week appointed Bahamian accountant Ed Rahming, a partner in KRyS Global (Bahamas), as Baha Mar’s joint provisional liquidator with two UK accountants, Mark Cropper and Alastair Beveridge of AlixPartners Services, it is their powers that will be more important in determining the $3.5 billion project’s short-term fate.

Tribune Business reported yesterday how Baha Mar and the Government appear to have vastly different interpretations of how the provisional liquidators will operate in practice, and whether the Izmirlian family will remain in control.

Baha Mar believes its chairman and chief executive will, and that the provisional liquidators will not displace management but rather work alongside them to maintain and preserve the project’s assets.

The Government and its attorneys, though, in the shape of Wayne Munroe QC, believe that Mr Izmirlian has lost control by virtue of the appointment of Mr Rahming and his colleagues.

These differences, with attorneys for China Export-Import Bank (Lennox Paton) and China Construction America (McKinney, Bancroft & Hughes) also present, probably explain why it is taking so long to finalise the provisional liquidators’ powers.

China Construction America yesterday took another shot at Baha Mar in welcoming the provisional liquidator appointment, accusing if of being “unwilling to reach an agreement” that satisfied the Chinese concerns.

Describing Friday’s ruling as “an important step forward towards” Baha Mar’s completion and opening, it added in a statement: “We look forward to playing a constructive role in the process going forward, and remain committed and fully prepared to re-mobilise quickly.....

“While Baha Mar was unwilling to reach an agreement which addressed the significant concerns of the principal stakeholders, our commitment to supporting the Bahamian Government and the people of the Bahamas has never waned.”

Meanwhile, Mr Izmirlian and Baha Mar made good on the pledge to move ahead with the Chapter 11 process, applying to the Delaware Bankruptcy Court for permission to hire Robert Kors as its chief restructuring officer.

Mr Kors, in an accompanying affidavit, alleged that his appointment was necessary because Baha Mar’s senior management were “extremely strained” in dealing with all the issues stemming from the Chapter 11 bankruptcy protection filing and subsequent litigation in the Bahamas.

“Due to the current circumstances in the debtors’ Chapter 11 cases, the resources of existing senior management are extremely strained, and the debtors require an additional officer capable of handling the organisation, negotiation, and prosecution of a reorganisation plan and other aspects related to the debtors’ reorganisation,” Mr Kors alleged.

He listed his primary responsibilities as managing aspects of Baha Mar’s daily operations and Chapter 11 restructuring activities; negotiating with creditors and developing a plan for the developer to emerge from the process; and assisting with the litigation its filing has spawned.

Baha Mar, for its part, concurred, alleging in documents filed with the Delaware courts: “The debtors require the immediate services of an additional highly skilled officer to assist with their restructuring efforts and the prosecution of their Chapter 11 cases in light of the substantial constraints currently imposed upon their senior management, and the complexities associated with their reorganisation.”

The developer added that Mr Kors would report to the Baha Mar Board, and be paid at a rate of $725 an hour for his work.

He will also recover his ‘out-of-pocket’ expenses, and can approach the US court for “additional or bonus compensation” once he completes his work. And Mr Kors will gain a $10,000 non-refundable engagement fee, and initial retainer of $50,000.

While the latter two sums will be paid from “a segregated trust account”, it is precisely these kind of outlays that the appointment of provisional liquidators is intended to prevent - at least in the Government’s eyes.

Whether Mr Rahming and his UK counterparts can block Mr Kors’s hiring and associated payments to him will depend on the powers granted to them.

Mr Kors in his affidavit alleged that he had “extensive knowledge” of both Chapter 11 and the hotel and gaming industries.

He said: “I possess extensive knowledge and expertise in the areas of bankruptcy and financial matters relevant to these Chapter 11 cases, and am well qualified to advise the debtors on such bankruptcy and financial matters.

“I have extensive experience in providing restructuring services in and out of Chapter 11 proceedings, and have rendered services on behalf of companies and creditors throughout the US.

“I have provided financial management, restructuring, turnaround, and litigation support, management and leadership (as an officer, trustee and director), both inside and outside of Chapter 11, to various companies and trusts including, among others: Stations Casinos; Alpha Technologies Group,; Post-Confirmation Trust for Fleming Companies; Woodside Group Litigation Trust; and Roll International Corporation.”