Liquidators sink teeth into Caroline Bay
Joint provisional liquidators have interviewed all the directors of the operating company of the failed Caroline Bay development and are combing through company records as they seek to recoup some of the taxpayers' money paid out on a $165 million debt guarantee.
Curtis Dickinson, the finance minister, told MPs that the JPLs were “working to bring clarity to this project and holding accountable all who are deemed responsible for the losses the people of Bermuda have suffered”.
Last year the Government took on the debts related to the project to build a resort and residences on the site of the former US Naval Annex on Morgan's Point in Southampton. The Government paid an additional $11 million to contractors who had worked on the project and had not been paid.
In a virtual session of the House of Assembly, Mr Dickinson outlined the work of the JPLs from audit firm EY, who had been appointed by the Supreme Court to oversee Caroline Bay operating company George's Bay Ltd.
The finance minister said the JPLs had the legal right to access all the insolvent company's records “to examine what rights the company may have against parties involved for the benefit of creditors”.
Mr Dickinson said: “That investigation began on their appointment and to date they have conducted initial interviews with each of the directors and have been provided with access to the records of the law firm representing GBL, and the auditors for the company. Access to the files of GBL and the books and records held by their directors continue to be provided to the JPLs as well.”
Brian Duperreault, the chief executive of insurance giant AIG, and his wife, Nancy, are among the four people listed as directors of George's Bay Ltd in Bermuda Government records, along with Roland Andy Burrows, CEO of the Bermuda Business Development Agency, and Kim White, care of Coson Corporate Services Ltd.
Mr Dickinson said the JPLs were reviewing the statements, bank records, e-mails and corporate documents of George's Bay Ltd in order to determine whether any party associated with the insolvent company bears any liability for the losses incurred by the Government.
He said the JPLs were also reviewing the state of existing buildings on the site and what work may need to be done in the short term to preserve their value, and assessing what it would cost to complete the project, and what its best use might be. They were also looking at company assets that could be sold.
Parts of the plans for the future of Caroline Bay development cannot be discussed in public for legal reasons, Mr Dickinson said.
He denied claims made by developers that he had not been legally required to meet the obligations associated with the guarantee last year.
“Specifically, the demand under the Tranche B agreements was received on August 19, 2019 and required payment within 45 days, by October 3, 2019,” Mr Dickinson said.
Craig Christensen, one of the Caroline Bay developers, told The Royal Gazette this month that the Government had not needed to take on the debts when it did in September last year. He said the lenders were willing to wait until the end of the year, as they knew the developers had a plan to save the project, involving scrapping the hotel and creating a billionaires' village on the waterfront site.
Efforts to reach Mr Christensen for comment yesterday were unsuccessful.
Mr Dickinson said the Bermuda Government now held 98.8 per cent of the claims outstanding against George's Bay Ltd, which he accused of running on a media campaign claiming developers could still secure new financing from the private-equity firm Starwood.
“We have made detailed comments in the press as to why we will not engage in a second transaction with them so there is little benefit to repeating those statements here, except to reiterate that the recent revelation that Starwood Capital had not agreed to provide financing on this deal came as a surprise to the Bermuda Government as well, this having been alleged on numerous occasions since December 2019 by the developers,” Mr Dickinson added.
The Government and the JPLs have each started winding-up proceedings against two companies related to the Caroline Bay project — Commodore Ltd and Caroline Bay Marina Ltd.
“Both companies failed to pay creditors' outstanding debts when they became due and are part of the wider Caroline Bay group,” Mr Dickinson said. “A complex series of legal proceedings have been commenced by the JPLs seeking to determine why the Caroline Bay project collapsed and who was responsible for the project failing.”
Should the assets be handed over to the Government in partial satisfaction of outstanding claims, stringent requirements would be made of any future developer partners, Mr Dickinson said.
“We are intentionally setting a high bar for any potential partnership,” he said. “Partners will have to demonstrate a history of successful work on projects of the size and scope represented by Caroline Bay, and will have to have capital they can commit to the project in the form of actual cash equity alongside the Bermuda Government.
“We will also insist that they have the highest integrity; all of which must be the case before they can even be considered.”
He added: “The land at Caroline Bay continues to represent an important opportunity for Bermuda. The economics of the development must be recast and devised with a realistic view of the world economy. This opportunity is too important to squander.”
• To read Curtis Dickinson's statement in full, click on the PDF link under “Related Media”