Mystic Mountain hiccup
Mystic Mountain receiver Wilfred Baghaloo says that he expects the Committee of Inspectors monitoring the bankrupt company on behalf of creditors to choose a new trustee in short order.
Debbie-Ann Gordon tendered her resignation last Friday, October 13.
The attorney-at-law, who was trustee for just over a year, had complained about lack of resources to execute the functions. She was also at odds with various Mystic Mountain creditors, some of which was played out in court.
The effective date of Gordon’s resignation, however, is unclear.
Legal sources say, the law requires the appointed trustee to continue executing the duties until the resignation is ratified.
“She has not been discharged from her duties. Although, she has submitted a letter of resignation to the Office of Insolvency, the law says that her duties as trustee continue unless she is discharged or another trustee is appointed to perform the duties required of a trustee under the Insolvency Act,” said attorney-at-law Chevánt Hamilton of the law firm Samuda and Johnson, citing Section 248 of the statute.
Hamilton, is one of the lawyers in the Mystic Mountain case, whose firm represents unsecured creditors Sygnus Credit Investments Limited, Mystic Dining Limited, Jamaica Bauxite Mining Limited and Josef Weigand GmbH and Company.
There was no word however regarding the prospective replacement for Gordon, but Baghaloo expects one to emerge soon.
“I do not expect any delay, given their previous attempts to appoint another trustee,” Baghaloo said, in reference to the various court disputes between Gordon and creditors of the bankrupt company seeking to recover monies owed to them by Mystic Mountain Limited, MML, the bankrupt operator of an adventure park based in Ocho Rios.
The sale of the business and leases to a company called Northjam, for US$13.4 million, was approved by the Supreme Court in August, but Baghaloo said the transaction is yet to close.
Other changes are taking place in anticipation of the ownership transition, but the park remains operational.
“The workers were terminated on October the 9th,” the receiver said. “I have asked those who choose to remain with us for another two weeks to facilitate transitioning.”
The resignation of the trustee came in the wake of yet another unfavourable court decision, which saw an application for approval of payments for trustee expenses from the estate being denied by Justice David Batts on October 12.
One of the lawyers in the case explained that costs were denied because the trustee had not presented invoices to the Committee of Inspectors, as outlined by the Insolvency Act. There are five court-approved inspectors representing the pool of unsecured creditors that have claims on MML.
Last week, the trustee was also ordered to pay costs for the October hearing in which her claim was dismissed, adding to the adverse decisions against her by Justice Batts.
“The change of baton [to a new trustee] is not likely to affect settlement of debts which are expected to occur after the sale of the property, which is not yet closed,” said Baghaloo.
“The agreement anticipates a closing – usually three to five months – and a possession date. I expected possession to occur by the end of October. I have a few assignments and consents to get from third parties and I hope to have same shortly,” he said in an update. Previously, the sale was expected to be finalised in September.
Baghaloo was appointed receiver after secured creditor Sky-High Holdings Limited exercised its debenture in early 2022 to take over the company. Gordon, as trustee, tried and failed to have the court reverse the takeover.
Sky-High holds $1.1 billion (about US$7 million) of MML’s senior secured bonds, on which the adventure company defaulted on payments in 2020.
The battle between the inspectors and Gordon continued up to September 28, when three MML creditors attempted to convene a meeting that was blocked by Gordon with a court injunction.
The trustee argued in an affidavit submitted to the court that their aim was to prevent funds from the sale of Mystic Mountain being submitted to her for distribution.
As secured creditor, the US$7-million debt owed to Sky-High Holdings is expected to be paid in full. Whatever is left after expenses relating to the receivership will be shared among unsecured creditors, the biggest of them being Sygnus Credit, which has a claim of US$1 million, about $156 million, against MML.
In granting the injunction preventing unilateral action to remove the trustee, Justice Jackson-Hansley ruled that were Sygnus Credit, Mystic Dining Limited or Josef Weigand GmbH & Co KG to disobey the order they would “be in contempt of court and may be liable to have your assets confiscated”.
Prior to last week’s hearing, which also held Gordon personally liable for legal fees, lawyers said there were at least three other orders against the trustee for which she would, in the parlance of the court, “be taxed” – the challenge of the Sygnus claim; challenge of the Sky-High Holdings debenture; and the sale agreement.
“Further, the judge orders no double counting, which is another possible layer of costs” to be borne by the trustee, a lawyer said.
Efforts to reach Gordon for comment were unsuccessful.