The Tribune

• ‘False’ allegations hit bank relations

• But appeal security slashed by 90%

• ‘Lives to fight on’ in financier battle

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Sky Bahamas principal says he is enduring “a compliance nightmare” as the now-defunct airline “lives to fight another day” in the battle over its former Lynden Pindling International Airport (LPIA) hangar.

Captain Randy Butler, in legal filings, asserted that the “false” fraud allegations levelled against him by Sky Bahamas’ former chief financier, Fred Kaiser, have resulted in Bahamian commercial banks refusing to open accounts or otherwise do business with himself and the airline.

His assertion that “no commercial bank in this jurisdiction is willing to open or allow me to have accounts” until the dispute is resolved by the Bahamian judicial system was revealed in a ruling that - temporarily at least - clears the way for Sky Bahamas to appeal an earlier Supreme Court verdict that ordered it to pay $220,000 plus interest to the owner of its LPIA hangar.

That entity, AOG Maintenance Company, is controlled by Mr Kaiser. The latter’s attorney, Michael Scott KC, subsequently demanded that Sky Bahamas and Captain Butler pay “security for costs” - a performance bond to ensure his client’s legal costs are covered should they win the appeal - on the basis that the airline “is either insolvent or prospectively insolvent” and would thus be unable to pay the bill.

The initial “security for costs” demand of $1.117m was reduced to $500,000, but Mr Butler and Sky Bahamas argued that such a sum was oppressive and intended to “stifle” their claim before it was even heard by the Court of Appeal.

Anishka Pennerman, the deputy registrar, while finding that Sky Bahamas was indeed likely insolvent, and that the prospects for its appeal succeeding “do not appear very favourable”, reduced the “security for costs” that the airline must pay to $50,000 - one-tenth of what Mr Kaiser and his attorney were seeking. This has to be lodged by December 8, 2023, and be in the form of “a bond with sureties with a licensed financial institution”.

Failing to comply with this will result in the appeal’s dismissal but Sky Bahamas’ attorney, Ashley Williams, in a message to Tribune Business said the outcome means the airline “lives to fight another day”. This interpretation, though, was rejected by Mr Scott, who told this newspaper yesterday: “They only live to fight another day if they’re able to come up with the directed bond by December 8 inclusive of sureties.

“The registrar more or less echoed our view that the appeal’s prospects are bleak to dismal. To the extent they look at the ruling as a kind of victory, my response to that is it’s pure fantasy. In the end, Mr Butler should realise, as with everything else in life, justice will prevail.”

Captain Butler, who had yet to read the full verdict when contacted by this newspaper, maintained that his and Sky Bahamas’ chances of success at the Court of Appeal were good. “I do have faith in the justice system of The Bahamas,” he told Tribune Business. “I believe any reasonable judge that will have seen the evidence before them will come up with a different judgment.

“That’s as simple as it is. That’s why I continue to appeal. The other side is trying to stop this case going before the Court of Appeal. I have my faith in the system.” The hangar battle is the first in a series of cases in the dispute involving Captain Butler, Sky Bahamas and the airline’s main financier, foreign investor Fred Kaiser and his companies, Alpha Aviation and Advanced Aviation.

The latter first initiated legal action over an an alleged $28m “bogus loan conspiracy” in late 2020, and the battle over the LPIA hangar reached the Supreme Court first. The affair triggered the resignation of former deputy prime minister and minister of finance, K Peter Turnquest, from the Minnis administration even though he was not named as a defendant in the original writ and has vehemently denied all claims against him.

Mr Kaiser cited numerous corporate infractions as the basis of his “security for costs” demand, including Sky Bahamas not having “a registered office for a considerable period of time”; not being in good standing with the Registrar General because no corporate returns had been filed for the years 2019-2023; and no declarations of ownership and no annual fees being paid for the same year.

Sky Bahamas admitted it had little to no money to meet this demand, but opposed Mr Kaiser’s application on the grounds that if granted it would “stifle a genuine claim”. Although the airline’s initial evidence was “woefully deficient” in enabling the court to determine whether it could pay “security for costs”, the deputy registrar gave it a chance to rectify the matter.

Having determined she had jurisdiction to hear the case, Ms Pennerman noted that Mr Kaiser and his company “set out extensive affidavit evidence to support its belief that Sky Bahamas is either insolvent or prospectively insolvent and, thus, unlikely to have the financial capacity to indemnify it if Sky Bahamas is unsuccessful in the appeal”.

Besides outstanding costs worth $77,308 stemming from a preliminary application in their battle, Mr Kaiser and AOG Investments Company also cited the $219,928 plus interest awarded by Justice Stewart to them over the hangar at the Supreme Court level plus further costs at $819,549 that were ordered to be paid. The industrial dispute with 43 former Sky Bahamas staff for alleged “unfair” or “wrongful dismissal” has also yet to be resolved.

The former Sky Bahamas financier then pointed to the $394,245 judgment obtained against Sky Bahamas by Nassau Airport Development Company (NAD), LPIA’s operator, and alleged that Captain Butler had “improperly” sought to charge an outstanding credit card debt of $67,140 that he personally owes Royal Bank of Canada (RBC) to the airline. 

“The evidence supporting Sky Bahamas’ potential insolvency is overwhelming. Its ascertainable and liquidated exposure in costs and judgments awarded against it is more than $700,000. Significantly, none of the affidavits filed on behalf of Sky Bahamas dispute that these amounts are still outstanding,” Ms Pennerman wrote. 

“Thus, in my view, the evidence presented by the applicant is sufficient to justify the concern that if Sky Bahamas has not yet satisfied its outstanding costs orders and judgments, there is a legitimate concern as to whether it will be able to satisfy additional costs, should its present appeal be unsuccessful.”

Captain Butler in his own evidence also admitted that Sky Bahamas is “in fact impecunious and does not have sufficient assets within the jurisdiction to cover the respondent’s costs”. Sky Bahamas alleged that he was unable to personally raise this sum due to “strained banking relationships” over the denied fraud claims; his own indebtedness; and the fact Mr Kaiser, who was the airline’s primary financier, is now opposing it.

With no dispute over Sky Bahamas’ inability to pay the appeal costs of it loses, Ms Pennerman said the airline never provided sufficient evidence to show its case would be stifled if a costs order was made. “There was also no evidence as to who financed the trial, nor who has financed this appeal thus far, which includes paying the legal fees of Sky Bahamas,” she added.

“Rather, Sky Bahamas seemed to leave it to this court to draw inferences that its claim would be stifled. The dearth of evidence provided has been plainly insufficient and inadequate evidence on which to reach the conclusion that a substantial order for security would stifle the claim. Accordingly, I am not satisfied, on the evidence provided by Sky Bahamas, that its claim would be stifled if an order for security is made.”

And Mr Kaiser and AOG also asserted that Sky Bahamas’ “protests of financial disability are false and completely disingenuous”. An investigations outlet, D&T Investigations, and the Glinton, Sweeting & O’Brien law firm, found real estate assets in both New Providence and Andros in the name of Captain Butler and his wife, Sky Bahamas and an entity called Daran Holdings Corporation.

Captain Butler and his wife, together with Daran, were alleged to collectively own some 12 parcels of land. Real estate in High Point Estates and Chazon Estates was also located. “The Butlers are substantial homeowners in New Providence and hold baronial estates in Andros,” evidence filed on behalf of Mr Kaiser alleged.

Mr Butler, in his evidence, alleged: “I can state unequivocally, that it would be impossible for me to raise the funds as a director of the appellant via private sources due to all of the false allegations made by Mr Kaiser and/or his agents which have been published in several of the daily newspapers, which include allegations of fraud.

“This, of course, creates a compliance nightmare as local banks have determined that they are unable to do business with myself or the appellant until all of the matters are resolved in court.” The former Sky Bahamas principal also alleged that both his personal accounts and those of Sky Bahamas were frozen due to action by the Department of Inland Revenue over the non-payment of VAT.

Returning to his banking troubles, he added: “No commercial bank in the jurisdiction is willing to open or allow me to have accounts until a determination has been made by the Supreme Court...  On the same token, Commonwealth Bank by letter dated September 2, 2021, also did not allow my wife and I to open a new account as a result of the allegations made.”

And the house in High Point Estates was also alleged to be the subject of legal proceedings by Royal Bank of Canada (RBC) which was seeking to recover $700,000. However, Ms Pennerman said no evidence had been provided to show that all Captain Butler’s and Sky Bahamas’ accounts had been frozen by the Department of Inland Revenue, or that all banks had denied him accounts - just CIBC FirstCaribbean.

“I accept the point by Randy Butler that there is no legal obligation on behalf of Daran Holdings to use its assets to assist Sky Bahamas. However, it is not unreasonable that if Randy Butler has an interest in both Daran Holdings and in Sky Bahamas, to the extent that the former has assets, it may be to its advantage to consider whether they might be used to assist Sky Bahamas in its time of need,” Ms Pennerman wrote.

“Nonetheless, Randy Butler has asserted that neither he nor any of his affiliated companies can be the friend that Sky Bahamas needs to assist with its security.” Stating that she was “not wholly persuaded” that Sky Bahamas could not raise its “security for costs”, Ms Pennerman nevertheless reduced the sum the airline must post to $50,000.

She did this on the basis that the “security” can only cover costs incurred before the Court of Appeal, and not include those run-up before the Supreme Court. She also found Mr Scott’s $122,000 bill of costs “not realistic”, and found that the bulk of expenses before the Court of Appeal will be incurred by Sky Bahamas.