Sale approval for Mystic Mountain expected soon
A MEETING in the Supreme Court next week is expected to see approval secured for a purchaser for Mystic Mountain Limited, MML, the Jamaican attraction which has been placed in bankruptcy, and for which the courts have appointed officials to restore creditors under local insolvency laws.
Wilfred Baghaloo, PricewaterhouseCoopers’ executive who has been appointed as Receiver of Mystic Mountain, had indicated that both local and regional buyers had been entertained in the quest to sell the operation.
Mystic Mountain’s default on bond payments followed the onset of the COVID-19 pandemic in March 2020, under which circumstances the tourism industry and the company’s revenues were affected.
Sky High Holdings Ltd, the secured creditor of MML, owns 100 per cent of MML’s senior secured fixed rate bonds in the principal amount of one billion, one hundred million Jamaican dollars.
MML failed to make principal and interest payments on those bonds, resulting in the full amount becoming due on the January 26, 2021.
Consequently, the debtor filed a Notice of Intention to file a proposal, pursuant to Section 11 of the Insolvency Act, which was served on the February 3, 2021. In a meeting held on February 8, an offer made to creditors was rejected, hence the receivership and the sale of the company.
A temporary injunction against sale secured by owners in 2022 was subsequently rejected.
A hearing to approve the sale is being sought in the Supreme Court before the end of April 2023. Assets for sale include purpose-built equipment for the attraction in Ocho Rios.
Receiver Baghaloo explained: “I decided voluntarily to have the court approve the sale process, hence the court matter next week.”
TRUSTEE CHALLENGES
Meanwhile, Trustee in Bankruptcy Debbie-Ann Gordon, is protesting lack of funding and secret creditor meetings from which she has been excluded.
Gordon stated in a public notice this week: “It has been brought to the attention of the trustee by some creditors that purported creditor meetings have been convened by certain persons to the exclusion of the trustee.”
The trustee stated: “For the orderly administration of a bankrupt estate … the law requires that creditor meetings be convened and chaired by the Trustee, who represents the entire body of creditors. Creditors are therefore being alerted that such meetings are illegal.”
Meanwhile, another contention of the trustee is that lack of funding from the company’s assets has affected the ability of the division to function optimally. This matter, The Financial Gleaner understands, is also to be aired in court.
The published update for creditors said among other matters: “It is to be noted that the expenses of the receiver assigned by the secured creditor incurred since February 2022 continue to be paid out of the assets of Mystic Mountain.”
By contrast, to date, Gordon stated: “No resources whatsoever have been made available to the Trustee to carry out its lawful function. This has hindered efficient administration for the bankruptcy.”
Notwithstanding, it was noted: “The trustee continued to represent Mystic Mountain and all creditors in legal proceedings.”
In response to the trustee’s claims, Baghaloo said: “I believe the matters in the trustee advertisement are the subject of court hearings, so I cannot comment. The court will obviously make its own pronouncements in due course.
“Overall, we continue to observe the acts and regulations germane to this matter to the best of our ability and interpretation. The overall objective remains to ensure a proper management of the receivership process for the benefit of all creditors (secured and otherwise).”
QUESTIONABLE
The notice from the trustee also shared that the secured creditor of Mystic Mountain had not established its security to the satisfaction of the trustee.
Accordingly, it was noted that the secured creditor’s standing “in priority”, in relation to other creditors, remained in question.
Gordon also said that of five Inspector claims against Mystic Mountain, only one has been admitted to date and the other four have been advised, it was noted, of the trustee’s reasons for non-admittance to date.
By law, the trustee must verify claims against the estate of Mystic Mountain and reconcile these with its books and records.
The trustee stated: “Although faced with several obstacles, including denial of access to the books and records of Mystic Mountain, the trustee has engaged auditors to deal with the process so that credible claims can be finalised and admitted for immediate payout at a verified value, once funds are in the hands of the trustee for distribution or as ordered by the court.”
The trustee said that fairness was being targeted and that otherwise the court would be asked to intervene.