By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Resorts World Bimini's original developer is alleging its Genting partner has converted an "illegitimate $201m liability" placed on the project's books into a loan to "mask" its financial "misallocations".

Gerardo Capo's RAV Bahamas, in its amended lawsuit that seeks to meet the south Florida federal court's demands, unleashed new claims asserting the Malaysian conglomerate, which holds majority 78 percent ownership in the development, has engaged in financial engineering to cover up its previous "dumping" of liabilities incurred elsewhere in its global empire on the Bimini resort's books.

In particular, RAV Bahamas is claiming that costs previously allocated to BB Entertainment, Resorts World Bimini's immediate parent, are now being "redirected" to BB Investment Holdings (BBIH). This is the entity that holds Genting's 78 percent stake in BB Entertainment, and Mr Capo's corporate vehicle alleged this has been done to make it appear as if these liabilities are loans from BBIH.

"In or around August 2020, while RAV and some BB Entertainment Board members were trying to discover the extent of the financial misallocations to BB Entertainment, Genting Americas devised a plan to conceal their future misallocations," RAV Bahamas alleged.

"Specifically, Genting Americas ordered that all future allocations from BSO (Bimini Superfast Operations, another of its affiliates) to BB Entertainment be re-directed to first BBIH, and then to BB Entertainment. Under Genting Americas’ 'redirection plan, there would be no more allocations from BSO to BB Entertainment; instead, the money would flow from BSO to BBIH, and then to BB Entertainment."

The document providing the basis for RAV Bahamas' claim has been redacted and 'blanked out' in the south Florida court files. However, the vehicle owned by Mr Capo and his family added: "The redirection plan was designed to conceal the fact that BSO’s costs were still being allocated to BB Entertainment.

"Notably the redirection plan also concealed the fact that even other Genting Group companies’ costs were also being indirectly allocated to BB Entertainment because those Genting Group companies would allocate their costs to BSO, which in turn allocated its costs to BB Entertainment.

"Under the redirection plan, the cost allocations from BSO would now appear as loans from BBIH to BB Entertainment. Notably, however, those were not loans that were actually made to BB Entertainment; they were merely cost allocations that were masked as loans."

Then, suggesting that this strategy went further, RAV Bahamas added: "In September 2020, Genting Americas had two of its officers sign an 'amended written resolutions of directors” of BBIH, under which the illegitimate $201.3m, the liability owed by BB Entertainment to BSO, was transferred to BBIH in exchange for shares of BBIH.

"Following the redirection resolution, Genting Americas re-characterised BB Entertainment’s $201.3m liability to BSO as now a loan payable by BB Entertainment to BBIH. The redirection resolution was signed in September 2020 but was dated January 2, 2020."

The shareholder dispute, which appears to have resulted in a complete breakdown of Board relations at Resorts World Bimini, was sparked last year when Mr Capo and RAV Bahamas demanded Genting pay more than $600m in damages for allegedly turning the project into a “financial wasteland” via a near-billion dollar liability “dump”.

Asserting that “a massive and co-ordinated fraud” has left the real estate and other assets it contributed to their Bimini partnership “essentially worthless”, RAV Bahamas accused 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, RAV Bahamas claimed that Genting “has deliberately kneecapped” its attempts to gain a true understanding of Resorts World Bimini’s true financial position by denying “full access” to the property’s financial records and its calls for an independent audit.

But Genting Americas and its affiliates have vehemently denied all of RAV Bahamas’ various claims and assertions. They, in turn, have accused their minority partner of trying “to extract an exorbitant payment” by mounting the $600m damages claim, while also seeking to “inflict severe reputational damage” on the publicly-listed resort, gaming and leisure group through a series of “baseless” allegations.

And RAV Bahamas was forced to file its amended complaint, containing the $201m liability's alleged conversion and "masking", in the south Florida court on Tuesday night after a judge ruled its initial lawsuit "cannot proceed" because it failed to name BB Entertainment, the resort's immediate holding company, as a party in the action.

Judge Joan Lenard found the claim "must be brought on behalf of" BB Entertainment, in which RAV Bahamas has a 22 percent minority equity stake, because all the lawsuit allegations are derived from purported "wrongful conduct" that harmed Resorts World Bimini's holding company.

As a result, Judge Lenard determined that BB Entertainment is "an indispensable party" to the dispute with the Malaysian resort and gaming conglomerate. Its non-inclusion meant RAV Bahamas' original lawsuit was dismissed, but the judge has now given Mr Capo and his family 21 days in which to file a new lawsuit that addresses the flaws she identified.

RAV Bahamas, in the latest version of its lawsuit, says it is now bringing the complaint "derivatively" on BB Entertainment's behalf. However, this will almost certainly be subjected to further legal challenge and attacks by Genting.

The Malaysian conglomerate, in seeking to dismiss the lawsuit, asserted that RAV Bahamas' claims "must be brought in a derivative shareholder action with BB Entertainment joined as a nominal defendant". This was because BB Entertainment, rather than RAV Bahamas, is the entity suffering direct damage if the allegations are true, rather than the latter, whose harm is "derived" or indirect.

Genting added that, if the south Florida court was to find BB Entertainment should be joined as a defendant, it would defeat use of the "diversity" clause because both the latter entity and RAV Bahamas are domiciled in this nation. This has likely influenced RAV Bahamas' move to name BB Entertainment as a plaintiff, even though Genting has a majority of directors and thus Board control of the latter.

Judge Lenard said the relief sought by RAV Bahamas, namely the $600m damages and unwinding of debt liabilities alleged to have been improperly incurred, would also benefit BB Entertainment. This, she added, was further confirmation of the case's "derivative nature".

Finding that BB Entertainment must be joined as a party to the lawsuit, the judge ruled: "The court will grant RAV one opportunity to amend the complaint to conform with" her derivative findings and address any repercussions this has for the "diversity" clause given that Mr Capo's vehicle and BB Entertainment are Bahamian entities. RAV Bahamas now has 21 days to file its revised complaint.