By LAMECH JOHNSON
Tribune Staff Reporter
A JUDGE yesterday said he required two days to give an oral decision on Baha Mar CEO Sarkis Izmirlian’s motion to uphold, in The Bahamas, the developer’s ongoing Chapter 11 bankruptcy proceedings in the United States.
Justice Ian Winder’s adjournment of the matter to Wednesday followed six hours of legal exchanges between the attorneys for the major stakeholders in the $3.5 billion resort development.
Roy Sweeting, Baha Mar’s lawyer, spent nearly three hours alone trying to convince Justice Winder that The Bahamas is a common law jurisdiction with the power to recognise foreign insolvency proceedings.
Queen’s Counsels Damian Gomez and Brian Simms, respective lawyers for the Crown and the resort’s financier – the Export-Import Bank of China – begged to differ and asked the judge to dismiss Baha Mar’s application immediately.
The call for a dismissal from Mr Simms and Mr Gomez was supported by lawyers Sean Moree and Lester Mortimer, QC, who represented general contractor China Construction America (CCA) Bahamas Ltd and Cable Bahamas Ltd, respectively.
Cable Bahamas is one of Baha Mar’s creditors.
Mr Sweeting began the 10am hearing by saying that the talks between the major parties, “despite all that has been said publicly, those negotiations continued and still continues”.
“And in the last two days, showed signs of bearing fruit,” Mr Sweeting said, referring to negotiations in China with the developer and its lender.
Mr Sweeting added: “(The) Baha Mar development, we are told, is one of, if not the largest developments in the region and represents the largest ever foreign direct investment in The Bahamas.”
“I think everybody understands the importance of what’s at stake here,” Mr Sweeting stressed.
The resort’s attorney said despite more than 10 years of obstacles that were overcome, the resort has reached the stage where, because of multiple delayed openings, the halt of work by CCA, a large payroll for more than 2,000 employees, and no resolution to mediated talks between the developer and contractor, “they (Baha Mar) considered what options they had.”
He noted that his client owed money to a large number of unsecured creditors and with no completion date in sight for the resort, “the best option appeared to them was the Chapter 11 bankruptcy in the state of Delaware.”
“They couldn’t sit on their hands and wait for the creditors to act,” Mr Sweeting submitted to the court.
He argued that Chapter 11 proceedings were not as unique as they were being made out to be and presented affidavits explaining, in detail, how it worked.
The lawyer said the Chapter 11 route was the best option for all involved to get the resort up and running and also make the necessary arrangements for restructuring of finances as needed.
“The creditors are not shut out of the cold and forced to accept whatever the developer comes up with,” Mr Sweeting said.
“What’s the connection of the 14 companies to the state of Delaware?” Justice Winder asked the lawyer.
Mr Sweeting said there were a number of booking and purchasing offices of the affiliated companies based in the US, but none in Delaware.
He added that the important point was that “the directors of those companies had the absolute right to submit themselves to the jurisdiction of that court.”
Mr Sweeting also dismissed thoughts that hearing the matter in the US court would “compromise the sovereignty of the Bahamas.”
He noted that an amendment to the notice of originating notice supports his submissions, as it had, using Justice Winder’s words, elevated the government to the status of a creditor because “we agree that government has a vested interest.”
The dispute may arise over how much is owed, he added.
Mr Sweeting, to support the application, highlighted that countries around the world have recognised “modified universalism” in the past century.
It is a legal concept relating to the general principle that in relation to corporate insolvency, national courts should strive to administer the estate of insolvent companies in the spirit of international comity.
Mr Sweeting argued that notwithstanding the existence of the Companies Act, “the statute doesn’t abolish common law jurisdiction.”
The Chapter 11 route, he continued, “was, in my client’s view, which I say is a reasonable one, the best of a bad range of options that was available to him.”
The Baha Mar attorney referred to the London-based Privy Council cases of Cambridge Gas Transport Corporation (2006), Ruben v Eurofinance (2013) and Singularis Holdings Ltd (2014) as further support to the application.
Rebuttal
However, Mr Simms countered that the cases cited by Baha Mar’s counsel did not support the application in the explicit ways he claimed as they referred to foreign companies undergoing insolvency.
Mr Simms placed specific emphasis on Baha Mar’s originating motion, which is where the resort, he said, “started off on the wrong foot.”
“The right foot would’ve been to determine where is the right jurisdiction to hear the matter,” Mr Simms said, adding that he would “skip the history” of what happened with Baha Mar.
He pointed out to the judge that Northshore Mainland Services Inc, the foreign representative for all of the companies that filed for bankruptcy protection in Delaware, was not a representative in any capacity concerning the proceedings.
He stressed that this was important because “all of the Baha Mar companies are not foreign representatives to themselves” and because Baha Mar is applying for recognition of the US court’s order on the basis of common law jurisdiction, “a foreign representative would have to apply to obtain recognition.”
The lawyer said that Baha Mar’s application was not asking the court to exercise its jurisdiction, but in fact asking the court to apply US law here when the Bahamas’ own laws concerning insolvency clearly stipulate that this could not be the case.
He dubbed the application and Chapter 11 proceedings “as a bar on China EXIM taking any steps to enforce its security.”
He noted that the Bahamas’ insolvency provisions were “the reason why people come here to do business and lend money here.”
Mr Simms said Baha Mar’s arguments cannot stand on a legal basis for the very reason that it is “unprecedented, novel and misconceived.”
He submitted to Justice Winder: “You should dismiss the application and provide reasons at a later date.”
An early decision, he said, would assist the public, the parties, and even the Delaware Court in having “certainty as to what the legal rights are in this case.”
Mr Simms’ submissions were accepted by Mr Gomez, who argued that there would be major ramifications if a government had to collect taxes owed to it from a foreign court.
Mr Simms, Mr Mortimer and Mr Moree, made a motion for the judge to dismiss Baha Mar’s application.
Justice Winder said he would take an adjournment until July 22 at 10am when he would give an oral decision.
The written ruling would follow at a date to be announced.
Source link : http://www.tribune242.com/news/2015/jul/21/baha-mar-court-ruling-tomorrow/
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Publish date : 2015-07-21 03:00:00
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