The Government of The Bahamas Urged to Fund the Baha Mar Joint Provisional Liquidators to Serve the Best Interests of the Unsecured Creditors

Mar 10, 2016, 16:48 ET from BMD Holdings Ltd.

NASSAU, Bahamas, March 10, 2016 /PRNewswire/ -- BMD Holdings Ltd. today sent the following letter to unsecured creditors urging them to press the government of The Bahamas to provide the necessary funding for the Baha Mar Joint Provisional Liquidators (the "JPLs") to represent the interests of the unsecured creditors of Baha Mar.

The following is the full text of the letter, as sent:

10 March 2016

Dear Baha Mar Creditor,

We are fast approaching March 27th, the one-year anniversary of the date that Baha Mar was to have opened to the public, and now, more than ever, is a time for plain speaking and jargon-free information about the current problems in respect of the project. That opening date was based on repeated assurances by CCA to the bank, the Bahamian Government and the developer, that the resort would be complete and ready to open. If CCA had lived up to its word, the resort would be opened; thousands of Bahamians would be gainfully employed; many Bahamian vendors and suppliers would be benefitting, and, not least, creditors would have been paid.

Instead, today there is no Baha Mar. Recent court documents strongly indicate that CCA deceived the Government, the developer, you, and the Bahamian people. The impact of this deception has resulted in serious economic consequences for many in the Bahamas and elsewhere. 

A lot has happened in the past year as a result of CCA's failures. Unfortunately, that has not included creditors being paid, or even the current prospect of being paid. 

As you well know, Baha Mar sought to reorganize under Chapter 11 of the U.S bankruptcy code, a constructive process that would have resulted in creditors being paid. But the Government (and CCA and the bank) fought the Chapter 11, and instead pursued the winding up (or liquidation) of Baha Mar in the Bahamian courts, with all of the destructive effect that has had. Thousands of Bahamians, who were to work at Baha Mar, became unemployed. Hundreds of Bahamian and international businesses which were to enjoy the success of Baha Mar were forced to become unsecured creditors. 

When the Government succeeded in pushing the winding up/liquidation process on Baha Mar, Joint Provisional Liquidators, or JPL's, were identified by the Government and appointed by the local court to preserve the Bahamian assets of the resort. The JPLs were paid from funds still remaining in Baha Mar's bank accounts and from certain repayments of money owed to Baha Mar. Then, when that money ran out, Baha Mar's assets were seized by the Export-Import Bank of China, or CEXIM, the secured lender, and put under the control of its receiver, the accounting firm Deloitte. The role of the receivers is to protect the secured creditor, the bank, not you, and not us.

Because of this, the JPL's are the only ones who can possibly advocate for, and have the responsibility to represent, the best interests of the vendors, suppliers and individuals who are the unsecured creditors. Despite this role of central importance, the JPLs are not being paid, and consequently, the unsecured creditors have no voice advocating their interests before the Bahamian court. 

Without such an advocate, no one can check or stem the actions of the receivers. The Prime Minister told the House of Assembly on Monday that intensive discussions are being held between CCA's parent, CSCEC, and the bank on detailed plans of remobilization.  Whilst we are all for progress, those comments also underscore that the bank and the receivers will assuredly not pursue the valuable claims against CCA or CSCEC, including the lawsuit against CSCEC currently pending in the UK High Court, as urged by Granite Ventures in its recent court filing. Those claims potentially add value to the estate and thereby generate real dollars to be paid to you. The Prime Minister said that such a deal between CSCC and CEXIM would require approval of their regulators, but he did not say that approval is required by the Bahamian court. Creditors should be very concerned that they will be left out in the cold. No one is protecting your interests right now.  

And this is exactly why the Bahamian Government must step up and act now on behalf of the unsecured creditors, to fulfill its assurances to you.The Government must now fund the JPLs so that they can do their job on behalf of Baha Mar's unsecured creditors, on your behalf. The assets of Baha Mar must be managed and monetized to maximize their value. This includes, among other efforts, pursuing the UK litigation claim against CSCEC effectively. This means not allowing either CEXIM or CSCEC to undertake actions, such as instituting new financial commitments, that further push the unsecured Bahamian and international creditors down the line in financial recovery. It means not allowing Baha Mar to be sold at a discount by CEXIM at the expense of the unsecured creditors.

Your interests are at stake. Tell the Government you need representation, and that the JPL's must receive funds to fulfill their role. There is no sign that the receiver (appointed for CEXIM, not you) will fund the JPL's and there is every reason to believe that they would not do so. Tell the court it must order an investigation of the claims against CSCEC. We urge all creditors, especially Bahamian creditors, to make their voices heard now, before it is too late. 

Yours truly,

Tom Dunlap

Media Contact
Robert Siegfried / Ross Lovern

SOURCE BMD Holdings Ltd.