The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Baha Mar’s senior management cannot be dismissed by the $3.5 billion project’s joint provisional liquidators without the Supreme Court’s permission, although regular employees can be released “in the ordinary course of business”.

The powers granted to Bahamian accountant Ed Rahming, a partner in KRyS Global (Bahamas), and two UK accountants, Nicholas Cropper and Alastair Beveridge, of AlixPartners Services, seem to require that they obtain Justice Ian Winder’s approval before releasing Baha Mar’s 2,400 staff en masse.

The need to take such action, in turn, will likely depend on whether the Government decides to pay the September salaries due to Baha Mar’s Bahamian staff from the $21 million it owed to the developer for the West Bay Street re-routing and associated infrastructure works.

Tribune Business calculations suggest that the $21 million can sustain one more monthly payment before it nears exhaustion, and one of the key decisions the joint provisional liquidators will have to seek court approval for is whether to accept the Government payment and what to with it.

Staff are normally the first casualties in any corporate receivership or liquidation, as the receivers/liquidators seek to cut costs.

What to do with Baha Mar’s employees will likely be among the biggest decisions Mr Rahming and his UK counterparts will take during their two-month provisional stint.

Provided the court agrees, they will likely accept the September staff payment from the Government should it be forthcoming.

The September 9, 2015, orders setting out the provisional liquidators powers’ state that they have “power to dismiss in the ordinary course of business, without the sanction of the court, individual employees of [Baha Mar] other than directors, officers and senior management at the level of vice-president and above”.

The Orders add: “The power to dismiss any other employees (including the senior management) shall be subject to the sanction of the court.”

That appears to imply that a ‘mass dismissal’ of Baha Mar’s employees can only occur should Justice Winder approve such a recommendation from the joint provisional liquidators who, as ‘officers of the court’, are effectively working for him.

Justice Winder’s Orders also require that Baha Mar be notified via its attorneys, Glinton, Sweeting & O’Brien, should the joint provisional liquidators apply to the Supreme Court for any instructions or Orders in the exercise of their powers.

It is unclear whether this is to allow Baha Mar to challenge their applications, but among the powers requiring court approval are any efforts by the joint provisional liquidators’ to sell “or otherwise dispose of” the developer’s hotel, real estate and other assets.

Justice Winder’s approval is also required for Mr Rahming and his team to “raise or borrow money and grant security” over Baha Mar’s property, and initiate or defend legal proceedings on behalf of the seven companies subject to their control.

They must also obtain permission to join forces with Baha Mar’s secured creditor, the China Export-Import Bank, over “the conveyance. sale or disposition” of its property. And any borrowings by the joint provisional liquidators from the Chinese bank or other lenders will be treated as a liquidation expenses, and subject to court approval.

The Supreme Court must approve the joint provisional liquidators’ accepting the surrender of a lease or tenancy at Baha Mar, something that will be of interest to both Rosewood and the other hotel brands, plus the Bahamians who hold retail and restaurant leases at the project.

Mr Rahming and his UK partners must also seek Justice Winder’s approval to apply for their recognition by foreign courts, which is something they may seek to do in relation to Baha Mar’s ongoing Chapter 11 bankruptcy protection proceedings in the Delaware courts.

China Construction America (CCA), Baha Mar’s contractor, in a filing yesterday with the Delaware court was keen to emphasise that the joint provisional liquidators had taken control of both Baha Mar’s real estate and financial assets.

As part of their remit to preserve and maintain Baha Mar’s assets and value, CCA said Mr Rahming and his UK colleagues would carry on Baha Mar’s business, with powers to sell its assets and borrow money subject to Bahamian Supreme Court approval.

“The Supreme Court echoed this court’s desire that parties reach an out-of-court resolution and, to that end, permitted the ‘promotion of a scheme of arrangement and/or compromise with all stakeholders’,” CCA added in reference to the joint provisional liquidators’ brief to attempt to negotiate a commercial settlement with all four parties to the dispute.

Mr Rahming, in a statement issued yesterday on behalf of the joint provisional liquidation team, said: “This is both a high profile and extremely complex situation which impacts a wide range of stakeholders, not least of all the people of the Bahamas.

“As a result, the ultimate success of the Baha Mar project is in everybody’s interest, and priority now is to begin our work in order to identify the best route forward. We will be working closely with all appropriate stakeholder groups throughout and further updates will follow in due course.”

Baha Mar, CCA, the China Export-Import Bank and the Government now have almost two months to negotiate a solution before the petition to formally wind-up Baha Mar is heard by Justice Winder on November 2.

The seven Baha Mar group companies in provisional liquidation are Baha Mar Ltd, Baha Mar Land Holdings Ltd, Baha Mar Properties Ltd, BMP Three Ltd, BMP Golf Ltd, Cable Beach Resorts Ltd and Baha Mar Enterprises Ltd.