The Tribune

GOVERNMENT’S recent statement accusing Sarkis Izmirlian of being “unpatriotic” in his attempt to inform Bahamians of what was really behind the failure of Baha Mar, brought back many memories of another disgraceful period of this young, independent nation’s history.

During that period any patriotic Bahamian who had the courage to work with the Americans in their efforts to cut off the Bahamas as a transshipment route for the ferrying of drugs from the south into the US, was “unpatriotic”. The Pindling government dismissed them as so many pariah on this country’s body politic. During that period some of us knew, by indiscreet whispers - probably dropped especially for our ears – that the Americans were holding a sealed indictment against one of our leaders.

A lengthy explanation of why it remained sealed, but never acted upon, was “declassified in part” and a “sanitized copy was approved for release in 2013/02/12”. It makes interesting reading and confirms much of what we knew at the time. However, we shall leave that for another day – another time. It is not relevant in this present discussion – only a reminder to government members that when someone is trying to tell you something that you would rather not hear, to dismiss that person as “unpatriotic” is the height of ignorance. One should listen and digest, because the results of the Baha Mar tragedy has already shaken investor confidence in this country.

And so when Pindling lost his election after 25 years, the Bahamas had earned the reputation as a “nation for sale”. This time it will be known as a country and a people that can’t be trusted. (See Mr Richard Coulson’s letter on this page today).

Now back to Baha Mar. We want to take up a particular statement made a few days ago by Attorney General Allyson Maynard Gibson that Baha Mar would still be closed if Mr Izmirlian’s resort to Chapter 11 in Delaware’s bankruptcy court had gone forward. We wonder how she can say that with such conviction, or is she unfamiliar with the second chance given investors under chapter 11? If Mr Izmirlian had been successful in Chapter 11, Baha Mar by now would have employed Bahamian contractors to complete the construction of the hotel and the staff, most of whom are trained, would be running it. By now Baha Mar would have opened and been doing business. If Mr Izmirlian’s case had failed the Baha Mar resort would have been put into liquidation — and so ends the story.

According to Wikipedia: “Chapter 11 affords the debtor in possession a number of mechanisms to restructure its business. A debtor in possession can acquire financing and loans on favourable terms by giving new lenders first priority on the business’s earnings. The court may also permit the debtor in possession to reject and cancel contracts. Debtors are also protected from other litigation against the business through the imposition of an automatic stay. While the automatic stay is in place, creditors are stayed from any collection attempts or activities against the debtor in possession, and most litigation against the debtor is stayed, or put on hold, until it can be resolved in bankruptcy court, or resumed in its original venue …

“If the business is insolvent, its debts exceed its assets and the business is unable to pay debts as they come due,the bankruptcy restructuring may result in the company’s owners being left with nothing; instead, the owners’ rights and interests are ended and the company’s creditors are left with ownership of the newly reorganised company.

“All creditors are entitled to be heard by the court. The court is ultimately responsible for determining whether the proposed plan of reorganisation complies with the bankruptcy law.

“Chapter 11 usually results in reorganisation of the debtor’s business or personal assets and debts, but can also be used as a mechanism for liquidation. Debtors may ‘emerge’ from a chapter 11 bankruptcy within a few months or within several years, depending on the size and complexity of the bankruptcy. The Bankruptcy Code accomplishes this objective through the use of a bankruptcy plan. The debtor in possession typically has the first opportunity to propose a plan during the period of exclusivity. This period allows the debtor 120 days from the date of filing for chapter 11, to propose a plan of reorganisation before any other party in interest may propose a plan. If the debtor proposes a plan within the 120-day exclusivity period, a 180-day exclusivity period from the date of filing for chapter 11 is granted in order to allow the debtor to gain confirmation of the proposed plan. With some exceptions, the plan may be proposed by any party in interest. Interested creditors then vote for a plan.”

“When a business is unable to service its debt or pay its creditors, the business or its creditors can file with a federal bankruptcy court for protection under either Chapter 7 or Chapter 11.

“In Chapter 7, the business ceases operations, a trustee sells all of its assets, and then distributes the proceeds to its creditors. Any residual amount is returned to the owners of the company.

“In Chapter 11, in most instances the debtor remains in control of its business operations as a debtor in possession, and is subject to the oversight and jurisdiction of the court.”

If Mr Izmirlian’s proposal had been accepted, both creditors and staff would have been fully paid and Baha Mar would be in business today.

It is interesting that although government is aiming for a soft opening in April, already — as happened in the case of Mr Izmirlian – dates are starting to change.

And the group that is understood to be the potential purchasers — must believe what they have heard of what caused Mr Izmirlian to stumble — because it is understood that they do not intend to close the purchase until the hotel has been completed and Baha Mar’s doors are ready to open. In our opinion that tells the full story. We now know who to believe.