The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Baha Mar liquidators will “not find one bloody thing” wrong when they probe the Sarkis Izmirlian-led Board’s conduct, a former director told Tribune Business yesterday.

Dionisio D’Aguilar said he had “absolutely no concern whatsoever” over the “summary investigation” that the Supreme Court-appointed liquidators plan to undertake into the actions of the $3.5 billion project’s former directors.

He then “threw it back at them” by questioning whether the liquidators for the seven former Baha Mar group companies had pursued every possible recovery avenue for the benefit of the project’s creditors.

The FNM’s Montagu candidate for the upcoming 2017 general election suggested they had not, arguing that “anything Chinese is off limits” to the liquidators - a reference to the $192 million UK High Court claim that Baha Mar initiated against its main contractor prior to the Chapter 11 bankruptcy filing in June 20155.

Mr D’Aguilar was responding after the trio of Bahamian accountant, Ed Rahming, and Nicholas Cropper and Alastair Beveridge, his UK counterparts, served notice of their intention to investigate the conduct of Mr Izmirlian and his fellow Board members prior to Baha Mar’s collapse into insolvency and Chapter 11 proceedings.

The liquidators, in a November 25, 2016, letter to Baha Mar’s remaining creditors, said: “In addition to their statutory responsibility to publicise their appointment and notify various stakeholders, the official liquidators will also conduct summary investigations into the conduct of the directors of the companies prior to appointment, and establish whether there are grounds for any further work to be undertaken over and above that required as part of their statutory duties.”

Some observers are likely to interpret the liquidators’ “investigation” as a so-called witch-hunt and attempt to sully Mr Izmirlian’s reputation, given that its timing coincides with the Government’s rapidly-moving negotiations with prospective Baha Mar purchaser, Chow Tai Fook Enterprises (CTFE).

However, Tribune Business understands that such ‘director investigations’ are standard procedure in court-supervised wind-ups, given that the liquidators have a statutory responsibility to ensure there is no wrongdoing and maximise asset recoveries for creditors.

Mr D’Aguilar, though, emphasised to Tribune Business that the liquidators’ efforts to uncover any wrongdoing by the former Boards and directors would ultimately be in vain.

“Nothing we did was in any way out of the ordinary as it relates to the running of a company of that size,” he said. “We were going on in the normal course of business and doing very well until we got screwed by China Construction America (CCA).

“They [the liquidators] can look, but they’re not going to find one bloody thing. There’s nothing to be found. We were acting in the best interests of the company.”

Mr D’Aguilar said Mr Izmirlian’s only focus, and that of his Board directors, was to complete the Baha Mar project and get it open, so that he could start realising a return on his family’s equity investment - said to be worth between $800-$900 million.

“The only focus was to get the facility open and operational, and there was nothing untoward to deter us from that mission,” he added.

“Everything we did was to get that location open and operational until we got screwed by CCA.”

Mr D’Aguilar, a key ally of Mr Izmirlian, queried whether the three liquidators - who had served in a provisional capacity for more than a year - had done everything they could to preserve and secure assets for the benefit of Baha Mar’s creditors.

“I’m sure Sarkis will say they didn’t pursue the damages claim against CCA,” he said, referring to the $192 million claim lodged against the Chinese contractor’s parent, over its guarantee that Baha Mar would be completed on time.

“The liquidators can look all they want, but I hope they have acted in the best interests of all the unsecured creditors and pursued every avenue they can in terms of people who owed the company [Baha Mar] money to ensure the unsecured creditors are paid off.

“I throw it back at them,” Mr D’Aguilar continued. “I hope they’ve done their job. I suspect anything Chinese is off limits. They’re not going to pursue anyone owing Baha Mar money who is Chinese.

“They can pursue the directors all they want, but they need to pursue those who owe Baha Mar money, including those who happen to be Chinese.”

Asked whether the timing of the liquidators’ investigation was coincidental, Mr D’Aguilar replied: “This is political season, so I’m sure they want to discredit anyone with connections to Baha Mar.

“Dionisio D’Aguilar is confident and comfortable they will never find anything suggesting something untoward was done. One thing about Sarkis Izmirlian is that he has an impeccable reputation.”

Mr Rahming, the Intelisys partner, and his UK counterparts were appointed as provisional liquidators on September 4, 2015, last year.

However, they were pushed into a secondary role less than two months’ later when the China Export-Import Bank, appointed Deloitte & Touche as its receivers with control over all Baha Mar’s assets.

Tribune Business previously revealed that the provisional liquidators were only kept around, via several Supreme Court extensions, because they served a useful purpose in keeping all Baha Mar’s secured creditors at bay until the Government and Chinese had completed their restructuring plans.

Very few Baha Mar creditors are now left, after former Bahamian employee, vendor and contractor claims were paid out by the China Export-Import Bank’s Perfect Luck Claims vehicle, and the liquidators have made it clear that those who elected not to participate in this process will not recover a single cent.

This is because Deloitte & Touche, in their capacity as receivers, have ‘sold’ or transferred all Baha Mar’s remaining assets - including the $192 million claim - to the China Export-Import Bank’s special purpose vehicle (SPV), Perfect Luck Holdings.

And, even after taking possession of all these assets, the China Export-Import Bank will not recover its $2.45 billion outlay via the sale to CTFE.

“The receiver-managers have advised the official liquidators that all, or substantially all, of the companies’ assets are subject to the security held by the bank,” the liquidators wrote in their November 25 letter.

“We understand the bank is suffering a shortfall in recoveries from the sale of the assets under the agreement. At this stage, as our investigations are ongoing, it is not possible to confirm whether there will be uncharged assets available to realise for the benefit of unsecured creditors.

“It does, however, appear unlikely that there will be any funds available for distribution to unsecured creditors.........

“If it is confirmed a dividend will not be paid following conclusion of the investigations, the Official Liquidators will consider making an application to Court to release them from the requirement to adjudicate upon unsecured creditor’s claims.”

Mr Rahming and his UK counterparts, though, did promise to review the terms of the Government’s agreement with the China Export-Import Bank for Baha Mar’s construction completion “to ensure that preferential and unsecured creditors have not been prejudiced”.

They added: “The official liquidators will ensure the companies are wound down in an orderly manner following the conclusion of the [construction] agreement.

“One of the objectives of the official liquidators will be to assess the nature and value of any assets held by the companies, and establish who is entitled to the proceeds from the sale of those assets.”

Although something of a ‘sideshow’ now, given the ongoing Baha Mar sales process, a meeting of creditors of the former development group has been scheduled for 9am on December 19 at the Melia Nassau Beach Resort.

Given that most Bahamian creditors have either sold or assigned their claims to Perfect Luck Claims Ltd, and thus have no right to attend, the numbers present are unlikely to be large.

However, the meeting may set the stage for another clash between Mr Izmirlian and his former Chinese partners. The original developer’s Granite Ventures vehicle is a Baha Mar creditor, by virtue of the funding provided during the Chapter 11 process, while the China Export-Import Bank has added to its status as the secured creditor by purchasing all the unsecured claims.

Apart from these two, the majority of remaining creditors are likely to be foreign vendors, contractors and ex-employees, who have not benefited from the Perfect Luck process.

Mr Rahming confirmed to Tribune Business: “We don’t expect a lot of the creditors to come as they’ve sold their claims or assigned them to Perfect Luck.”

He described the creditors’ meeting as “a statutory requirement”, where those in attendance would be able to ask questions about the liquidation process and its likely outcome.

“This is a step we have to go through in the liquidation,” Mr Rahming said. “We’d want all creditors who were not part of the Perfect Luck process to participate in the meeting.”

He added that the liquidators had yet to produce a formal report to the Supreme Court and creditors, as is customary, because they had “not been in 90 days” and little of note has occurred.

“It’s not necessary to go through that step,” Mr Rahming said. “Normally we would, but I don’t think so given the timeframe we’re looking at.”

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