By Fay Simmons

Tribune Business Reporter

jsimmons@tribunemedia.net

Dionisio D’Aguilar, who sat on Baha Mar’s board under the mega resort’s original developer, said the unwillingness shown by Chinese state-owned CSCEC Holding Company (CSCECH) to settle the $1.6bn debt with BML Properties is a “red flag”,

Speaking to Tribune Business, Mr D’Aguilar said he is still shocked the Chinese government is choosing to “wiggle and worm” out of paying the $1.642bn damages awarded to Baha Mar’s original developer, Sarkis Izmirlian, by the New York State Supreme Court.

“This is a sad day for doing business with companies that are owned by the Chinese government. Obviously, if you engage them and go into business with them, and the relationship ends in a divorce like this one, they will do their endeavour best to wiggle out of settling the claims that are being made against them,” said Mr D’Aguilar.

“I can’t imagine. I’m still in shock that a company that’s owned by the government of China continues to wiggle and worm itself out of a judgment against it for breach of contract and fraud, and rather than attempt to settle it, they are displaying no attempt to bring this very unfortunate situation to an end.”

Mr D’Aguilar said individuals should be wary of doing business with the Chinese due to their continued refusal to acknowledge a judgment that has already been lost on appeal.

“I mean, I could never imagine the government of the Bahamas doing something like that. If the government of The Bahamas, for example, got a judgment against it, appealed and lost. I would assume that we would settle.  The Chinese government, however, it’s very unfortunate and it’s very disgraceful that they are not attempting to settle this situation, and they continue to wiggle and worm,” said Mr D’Aguilar.

“This is a red flag if anybody wants to do business with the Chinese. If you do business with the Chinese and your relationship doesn’t end in the way it should. And even though the court instructs the company to settle, they will wiggle them and worm their way out of their obligations.

“I think it’s very unfortunate that this is this matter continues. Yes, it’s before the courts, but as this brief outlines, they are making absolutely no effort whatsoever to settle this matter, and this is how they go.”

BML Properties Ltd has launched an aggressive legal campaign in US bankruptcy court seeking to hold Chinese state-owned CSCECH accountable for more than $1.6 bn in debts.

In a series of filings, BML said they are the largest unsecured creditor in the Chapter 11 case and asked the court to affirm its direct claims against CSCECH, lift the automatic bankruptcy stay to allow enforcement of the New York judgment, and grant permission to sue CSCECH as the alleged “alter ego” of the debtor, CCA.

BML said they obtained the $1.6bn judgment in New York state court just weeks before CCA filed for bankruptcy and warned that unless CSCECH is held accountable, they stand to lose virtually everything — as it holds 99 percent of the case’s non-insider unsecured claims.

BML accused CCA, a US-based affiliate of CSCECH, of operating as nothing more than a “cost centre” for its Chinese parent and claims the bankruptcy is being used to shield CSCECH from liability while draining the estate.

“This chapter 11 case is not the typical “mega” chapter 11 case filed in this district. The Debtor is not reorganising in any normal sense. The Debtor by its own admission operates only as a ‘cost-centre’ for CSCECH and its affiliates, and it is in no way seeking to restructure its operations because it has no intention of doing anything other than being an affiliated cost centre. It is now “borrowing” money on a secured basis from CSCECH, its immediate parent company, and loses money every month through its “operations” because the Debtor effectively generates zero revenue,” said court filings.

BML also highlighted the absence of a court-appointed creditors’ committee, meaning no fiduciary is currently monitoring the estate on behalf of general unsecured creditors.

Court filings also accused CCA and CSCECH of working in concert to avoid paying the judgment, and of preparing to offer releases to CSCECH through a Chapter 11 plan without holding the parent company financially accountable.

BML further alleged that CCA intends to weaponize the automatic stay to block enforcement of the judgment at CSCECH’s request.

“But it is clear that the Debtor, including the Special Committee, are simply not going to pursue the Debtor’s parent. The Debtor’s plan is to take steps to give CSCECH releases and not push CSCECH to make any fair offers,” said court filings.

“The Debtor has made clear that it will do anything to disrupt BMLP’s efforts to have its Judgment satisfied, and will no doubt argue that BMLP’s efforts to pursue CSCECH on its direct claims would violate the automatic stay. The Debtor likely will do so only at the behest of CSCECH, since a successful BMLP claim against CSCECH means the Debtor will not have to face its inability to satisfy the Judgment, benefitting the Debtor and its non-insider creditors but harming the Debtor’s parent.”