Court action threatens talks for Mystic Mountain sale
A preferred bidder has been selected to purchase Ocho Rios-based attraction Mystic Mountain, the main asset of the bankrupt Mystic Mountain Limited, MML.
However, while receiver Wilfred Baghaloo, of accounting and tax advisory firm PricewaterhouseCoopers, says final negotiations are advanced for the conclusion of a sale agreement, court action filed by MML’s owners, Karibukai Limited, threatens to the derail the sale.
Speaking with the Financial Gleaner from overseas on Tuesday, Baghaloo declined to name the preferred bidder, which he said was selected from five bids received following the conclusion of the bidding process on June 20. He said the selection of a preferred bidder was made known on July 15.
Baghaloo was named receiver by MML’s secured creditors Sky-High Holdings Limited after MML was declared bankrupt in February this year, having exhausted bankruptcy protection provisions under the Insolvency Act. The bankruptcy was forced after creditors, including Sky-High, called in more than $1.3 billion in debt after MML missed scheduled bond repayments.
Sky-High’s directors are hotel mogul Adam Stewart and businessman Ian Haynes.
“Negotiations have not concluded. Until negotiations are concluded and documents are signed, I prefer not to say who the preferred bidder is, but we are extremely advanced in finalising the documentation that is required. There is other documentation that is required, in addition to the sale agreement,” Baghaloo said.
While the receiver is upbeat about the movement towards a sale, Karibukai Limited, the company which owns 100 per cent of MML and which is in turn majority owned by Rainforest Adventure Holdings Limited, is said to have filed a lawsuit against the receiver. The precise grounds of the legal action, the latest of several that have dogged Mystic Mountain for the past few years, have not been ascertained. Lead attorneys for Karibukai at the Kingston-based law firm DunnCox were not immediately available for comment.
It is understood that the matter is scheduled to be heard in the commercial division of the Supreme Court in mid-October.
Baghaloo appears undaunted by the legal challenge, noting that such actions were par for the course in these matters.
“Yes, as is customary in these situations, the shareholders of the company normally have concerns, questions and challenges. Sometimes those manifest themselves in legal situations. So, yes, I think they have commenced some legal process,” the receiver confirmed when asked about the latest court action.
Meanwhile, Baghaloo also disclosed that he has resigned the role as trustee for the creditors, in order to concentrate on his function as receiver. After being named receiver, he had been given the dual role of trustee after the creditors removed MML-appointed trustee Caydion Campbell. It is understood that Baghaloo’s dual role was challenged and confirmed to have been in order by the court.
Financial Gleaner sources say that despite the court’s affirmation, the controversy over the dual role did not sit well with PricewaterhouseCoopers Global.
Baghaloo said this week that his resignation was occasioned by the accounting firm’s determination of the need for him to focus on his role as receiver.
“I elected to resign as trustee a few months back. We (PricewaterhouseCoopers) are a global network and as a global practice we thought that it was best that I focus on the receivership rather than focusing on both the trustee and receivership roles,” he said.
He said that since his resignation, the creditors have selected attorney-at-law Debbi-Ann Gordon as trustee.
The sale is required to raise the money to make the debt payments to the creditors starting with Sky-High.
“The current solution is a public sale of the company’s assets and operations, which commenced two months ago and is expected to close in forthcoming months,” Baghaloo had said in June.
“No payment has been made to any pre-receivership creditors. All pre-receivership creditors are crystallised until we have a solution on the way forward,” he said at the time.
The bankrupt, indebted MML also has unsecured debts including an almost US$1 million short-term loan from Sygnus Capital Limited; trade payables and other liabilities of US$1.5 million, including deferred taxes of about US$81,000; and a long-term loan of approximately US$804,000 from German businessman Josef Wiegand.