By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
Efforts to market Baha Mar creditor payouts as “a goodwill gesture” by its secured creditor were challenged yesterday, a key Sarkis Izmirlian ally saying: “The Chinese don’t do something for nothing.”
Dionisio D’Aguilar suggested that “every Bahamian will laugh” at efforts to sell the creditor payouts as such, especially since the ‘sealed’ agreement for Baha Mar’s construction completion prevents them from knowing what the Government gave the China Export-Import Bank in return.
And K P Turnquest, the Opposition’s deputy leader, argued that both the bank and Baha Mar’s main contractor, had an obligation to ensure Bahamian creditors were compensated given their actions in the dispute with Mr Izmirlian.
Rather than let the developer’s Chapter 11 bankruptcy protection process play out, Mr Turnquest said the Chinese state-owned entities had actively opposed this and ensured its removal, then supported the move to place Baha Mar into provisional liquidation before moving in with their own receivers.
Given the key roles both the China Export-Import Bank and China Construction America (CCA) have played in how Baha Mar has reached this point, Mr Turnquest implied that it was only proper that they should seek to help settle creditor claims.
Both Mr Turnquest and Mr D’Aguilar were speaking out following yesterday’s launch of the formal process through which Baha Mar’s former staff, plus Bahamian contractors and vendors, can claim the debts owed to them by Baha Mar.
The five-person creditor committee appointed to oversee the payout process said all non-employee creditors have just 10 days - until September 16, 2016, in which to gather and submit all the documentary evidence (invoices, statements and purchase orders) to support their claims and the amounts.
However, this process only applies to companies who are direct creditors of Baha Mar and its affiliated companies. Bahamian contractors and vendors who are owed debts by CCA will have to negotiate with the Chinese contractor separately in a bid to obtain monies owed.
“Please note that you should only submit a claim if you are owed directly or indirectly by a Baha Mar company as at 31 October, 2015,” the committee said. “For avoidance of doubt this notice does not cover sub-contractors of CCA Bahamas Ltd.”
The Baha Mar-related claims have to be submitted either via e-mail or by hand (mail), while the committee will seek to reach out to Baha Mar’s 2,000-plus former employees in a bid to settle their claims for severance pay and other benefits by month’s end.
“It is important to note that the Baha Mar companies in provisional liquidation have no funds from which to pay creditors,” the committee said in a notice.
“The Bank is offering this special support as goodwill towards the Bahamian people. The bank will shortly place on deposit in the Bahamas certain funds for the work of the committee.”
This statement produced further scepticism from persons already critical of the Government’s handling of the Baha Mar project.
“This isn’t a goodwill gesture. It’s the fulfillment of an obligation they have in the Bahamas to the country,” Mr Turnquest told Tribune Business, pointing to the China Export-Import Bank’s role in bringing Baha Mar to its current state.
“I don’t believe that for one moment,” Mr D’Aguilar added of the ‘goodwill gesture’ description. “We haven’t seen the other side of the deal to see what it has cost us.
“This gesture of goodwill, I know every Bahamian will be laughing at that. You can’t see what the reason for the goodwill is because the documents are sealed. And the devil is in the detail - it’s only the contractors of Baha Mar, not the sub-contractors of CCA.
“Let me tell you how this is going to work. The Chinese are not going to give you something for nothing.”
Such assertions have, though, been rejected by sources close to the deal between the Government and the China Export-Import Bank.
They have routinely pointed out to Tribune Business that the latter is under no obligation, legal or otherwise, to fund compensation for Baha Mar’s former employees, plus Bahamian contractors and suppliers.
They have emphasised that Baha Mar’s $2.45 billion secured creditor has effectively stepped into the breach left by Mr Izmirlian and his team, who they argue should be responsible for settling the project’s debts since they are owed by the Baha Mar group of companies.
Tribune Business has previously revealed that China Export-Import Bank is making “about $100 million available” to compensate Bahamian creditors and former employees.
Those owed $500,000 or less, which will likely be close to 90 per cent of several thousand creditors (including the 2,000-plus staff) will receive 100 per cent of what they are owed.
And, while all those owed higher amounts may have to “negotiate and compromise” over what they are owed, Tribune Business was told they are likely to “fare quite well” and receive more than 50 per cent of what they are owed.
And the 123 Bahamian contractors owed some $74 million, together with local vendors, have the potential to obtain further work and contracts related to Baha Mar’s completion.
While CCA is likely to try and ‘beat down’ the claims it receives from its Bahamian sub-contractors, in some cases it will be unable to push this too far, especially if it needs their help to complete Baha Mar.
Prime Minister Perry Christie previously said that part of the Baha Mar construction completion agreement involved CCA compensating its sub-contractors and vendors for what they are owed.
Yet Mr D’Aguilar argued: “The wiggling has started. It’s now coming out that the story is not as rosy as it once was. If you’re owed money by CCA, you’re beholden to this company.” He also queried whether CCA would be paid first by the creditor committee, and how much it would receive.
Still, both Messrs Turnquest and D’Aguilar said they would reserve further judgment until they saw how the creditor claims process played out.
“We have to watch this and ensure they follow through on the commitments they have made,” Mr Turnquest told Tribune Business of the Government and the Chinese, “and that every individual creditor is fully compensated.”
He also queried how the process of compensating CCA’s Bahamian creditors would work, and questioned why the Baha Mar payout process had been taken away from the supervision of both the project’s Deloitte & Touche receivers and the provisional liquidators, plus the Supreme Court.
Tribune Business understands that this can be done because the payments are coming “ex-gratia” from the China Export-Import Bank, and are not being made from assets belonging to the Baha Mar companies that are subject to the provisional liquidation/receivership.
However, this has created a process whereby Baha Mar’s foreign creditors are being discriminated against, with Bahamians receiving preferential treatment in relation to their claims.
These claims, once approved by the committee, will then be assigned to an entity called Perfect Luck Claims Ltd so that Bahamian creditors get paid, according to documents issued yesterday.
Comments
banker 8 years ago
Is this a joke? What the hell? Perfect Luck? Who named that? Who runs that? Who owns it? It sounds like a Chinese laundry. This is laughable and unreal. Perfect Luck. That's what we Bahamians need right now -- perfect luck, and it een coming!
Honestman 8 years ago
The most stupid thing since the suggestion that the Bridge Toll be increased to $1 and eight cents to cover VAT!!
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