The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Resorts World Bimini’s minority owner is alleging its Malaysian partner sought to sell the hotel behind its back after realising it could no longer “conceal” the improper dumping of multi-million liabilities on its books.

Gerardo Capo’s RAV Bahamas investment vehicle, which holds a 22 percent equity ownership interest in Bimini’s ‘anchor’ resort, claimed Genting Americas had quietly approached realtors in early 2024 in a bid to offload the loss-making property that had purportedly accumulated a $693.665m solvency deficiency by year-end 2022.

The allegation, contained in documents filed with the south Florida federal court on Friday, is part of RAV Bahamas efforts to defeat an attempt by Resorts World’s 78 percent majority shareholder to have its $600m damages lawsuit dismissed before it even gets to trial.

Genting Americas, part of the multi-billion dollar Malaysian conglomerate with the same name, argued in December 17, 20204, legal filings of its own that the increasingly bitter shareholder dispute “must be either arbitrated or litigated in the courts of The Bahamas” rather than in south Florida. And it has advanced multiple legal grounds for the latter to dismiss RAV Bahamas’ action.

But Mr Capo’s investment vehicle, while alleging that it is unable to assess Resorts World Bimini’s current financial performance, reiterated its position that it has been “at every turn, deliberately kneecapped” from finding out about the property’s true status because Genting and its subsidiary entities have denied it access to the necessary information.

Urging the south Florida court to permit its lawsuit to proceed, RAV Bahamas asserted: “RAV alleges extensive facts supporting fraudulent concealment, including Genting Americas’ deliberate efforts to cloak its financial shenanigans to mislead RAV as well as its active concealment to prevent RAV’s inquiries and elude its investigative efforts.”

The Resorts World minority shareholder, claiming that it was barred from inspecting the financial record of BB Entertainment, the hotel’s immediate holding company, or having them independently audited, alleged: “Genting Americas would withhold the audited financial statements for years at a time.

“And it would regularly misrepresent the losses and expenses that BB Entertainment was incurring. This pattern continued and, as of March 12, 2024, Genting Americas had still not provided any of the information concerning BB Entertainment’s debt breakdown” despite purported promises that such details would soon be disclosed.

“Genting Americas some time in early 2024 - perhaps sensing that its efforts to conceal and keep RAV in the dark were reaching their expiration date - approached realtors to explore selling the entire resort, at which point RAV realised that Genting Americas’ would simply never address or rectify the massive misallocations of debt and expenses that RAV had been trying to investigate,” Mr Capo and RAV Bahamas claimed.

“Year after year Genting Americas, among other things, saddled BB Entertainment with improper debt to RAV’s detriment and, to this very day, continues to add to that debt and charge interest on that illegitimate debt, including a total of $134.216m in interest since 2020 and a total of approximately $254.028m in interest (and counting) since 2013.

“Genting Americas’ tortious conduct has, among other things, rapaciously continued into early 2024 when Genting Americas unilaterally explored selling the resort to bury its conduct.” However, in vehemently denying these and all previous allegations, Genting Americas and its parent have accused their minority partner of trying “to extract an exorbitant payment” by mounting their $600m damages claim.

It also accused RAV Bahamas, the vehicle owned by Miami-based Mr Capo and his family, of seeking to “inflict severe reputational damage” on the publicly-listed resort, gaming and leisure group through a series of “baseless” allegations.

Genting Americas has cited numerous legal grounds as warranting the lawsuit’s dismissal in favour or arbitration in The Bahamas. In particular, it is arguing that it is the wrong party to be named as the defendant, instead asserting that BB Investment Holdings (BBIH), the vehicle which holds its 78 percent majority stake in Resorts World Bimini, is the correct entity.

There are also assertions that the claim is time-barred under Florida’s statute of limitations, and that it fails to rise to the standard or level necessary to plead fraud. However, RAV Bahamas countered in its Friday legal filings: “Genting Americas moves to dismiss a complaint, but it’s not the complaint that RAV actually filed.

“A deliberate, Sisyphean effort to push the complaint’s allegations aside in service of an alternate narrative animates virtually all of Genting Americas’ arguments..... When you ignore what’s there, it’s a lot easier to argue the absence of it. That aptly describes Genting Americas’ argument that RAV has not pled the fraud with particularity.

“First, RAV sufficiently alleged that Genting Americas made ‘false statements’ and ‘misrepresentations’. Every audited financial statement, which RAV alleges was prepared using financial records that Genting Americas prepared, constitutes a separate false statement,” the original Bimini Bay developer added.

“Similarly, RAV’s allegations point to specific line items in those audited financial statements which are false, including but not limited to, the $795m for ‘construction costs’; BB Entertainment’s $150m loan payable to Bimini Superfast Operations; overcharging BB Entertainment a disproportionate share of Genting Americas’ officers and employees’ salaries; and falsely stating that the audited financials were ‘approved’ by BB Entertainment’s Board.

“And Genting Americas’ officers repeated and falsely misrepresented that they were addressing the runaway cost...... Genting Americas’ own president confirmed the abuse and unconscionable advantage of its relationship when he admitted to $150m of illegitimate debt and overcharging BB Entertainment for its employees’ salaries.”

RAV Bahamas is essentially accusing Genting of using its 78 percent majority ownership, plus Board and management control, to conceal how it funnelled hundreds of millions of dollars in liabilities incurred elsewhere in its global empire on to the Bimini resort’s books.

Complaining that this has undermined the value of its investment, while also “depriving” it of expected profits, the minority owner is alleging that its partner has turned Resorts World Bimini into a “financial wasteland” via a near-billion dollar liability “dump” that represents “a massive and co-ordinated fraud”.

The financial statements for BB Entertainment, the Bahamian-incorporated holding company for Resorts World Bimini, reveal that the project has consistently incurred annual losses amounting to tens of millions of dollars ever since RAV Bahamas teamed with Genting some 12 years ago in 2012.

BB Entertainment’s 2022 audited financials saw the EY (Ernst & Young) accounting firm qualify the report by noting a “material uncertainty related to going concern”. It wrote: “We draw attention to note two in the financial statements, which indicates that the company incurred a net loss of $151.284m during the year ended December 31, 2022.

“As of that date, the company’s current liabilities exceeded its current assets by $70.546m and had a net equity deficit of $693.665m. As stated in note two, these events or conditions, along with other matters as set forth in note two indicate that a material uncertainty exists that may cast significant doubt on the company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.”

That year’s $151.284m loss followed $114.22m worth of ‘red ink’ that Resorts World Bimini incurred in 2021, which both exceeded the $105.581m loss generated in 2020 when the COVID-19 pandemic was at its height and the $69.624m hit sustained in 2019.

BB Entertainment’s financials showed that, at year-end 2022, the company was effectively insolvent with some $191.511m in assets dwarfed by $885.176m in total liabilities to produce the $693.665m solvency deficiency. Of the $191.511m in total assets, the majority - $165.254m - represented the value of Resorts World Bimini’s real estate, with its holding entity possessing just under $3m in cash and equivalents.

The majority of BB Entertainment’s liabilities, some $795.452m, was described in the financials as “borrowings” from BB Investment Holdings, the entity through which Genting holds its 78 percent majority stake in the project. Some $578.848m of this sum was said to be “interest bearing” at a rate of Bahamian Prime plus 5 percent, which would be 9.25 percent.