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Firm threatens land sale over $18m debt

A firm has threatened to start selling off Corporation of Hamilton land if it does not receive the $18 million it is owed over the failed Par-la-Ville hotel project by the end of Friday.

Mexico Infrastructure Finance's legal team has told the corporation and the Bermuda Government it has no choice but to sell Hamilton Fire Station, the Chamber of Commerce building and the Custom House if the debt is not settled.

In a letter seen by The Royal Gazette, the firm's legal team expresses extreme disappointment at the conduct of the city's administration for “failing to engage in any constructive dialogue”.

MIF also accuses the corporation of going against the Supreme Court judgment that entitles it to an extra $800,000, on top of the $18 million, in receivership revenue and expenses over the failed hotel deal.

Last night, Hamilton mayor Charles Gosling confirmed discussions between the two sides were continuing and the corporation had offered “every reassurance” that it was making “every effort” to settle the $18 million judgment.

Mr Gosling pointed to recent legislation increasing the amount the corporation could borrow from $20 million to $30 million.

He told this newspaper: “The corporation has also kept MIF abreast as best as possible in relation to its discussions with the lending institution for the securing of the funds as well as the ministry in relation to amending various legislation that would permit the corporation to borrow the necessary funds — while permitting them to continue with the day-to-day operations.

“The corporation is confident that they will be in a position very shortly to pay all funds owed to MIF as they are fully aware of their commitment under the court judgment.”

Mr Gosling's pledge was endorsed by Michael Fahy, the Minister of Home Affairs, who said he remained confident in the mayor's ability to see the matter resolved.

Last week, senator Fahy told this newspaper the corporation could reach an agreement within days to satisfy its debt over the matter.

Yesterday, he stated: “The ministry has separately kept MIF's lawyers advised of efforts being made by the corporation to satisfy its obligations and more recently I commented publicly as to those efforts.”

However, in its letter to the corporation and Government at the end of last week, MIF maintained it would take steps to execute the judgment “without further notice” if it did not receive the money owed on or before the close of business on Friday.

“In light of these developments you have left our client with no other option but to proceed to execution which will include the sale of your client's properties including Hamilton Fire Station, the Chamber of Commerce building, and the Custom House, as well as the garnishment of its income,” the letter states.

“In an effort to provide your client with one last opportunity to meet its obligation, our client will hold off taking such action until close of business on January 15.

“Payment of the judgment of $18 million together with accrued judgment interest and net of receivership revenues and expenses of $817,935, as of January 15, must be received by our client, otherwise steps to execute against the judgment will commence without further notice.”

On July 9, 2014, developer Par-la-Ville Hotel & Residences Ltd entered into a credit agreement with MIF to borrow $18 million for a proposed hotel development in Hamilton.

On the same date, the Corporation entered into a guarantee of the loan and, as security for that guarantee, it provided MIF with a first mortgage over the Par-la-Ville parking lot.

That loan was later recalled, leaving the corporation liable for the $18 million owed to MIF with interest of about $3,450 a day.

The letter from MIF's legal team further states: “Our client is extremely disappointed that your client has declined to engage in any constructive dialogue in connection with the repayment of our client's $18 million judgment, together with accrued judgment interest net of receivership revenues and expenses, which stands at $769,606 for a total obligation of $18,769,606 as of January 1, 2016.

“No sensible timeframe has been provided, this despite the fact that your client promised to repay our client either at the end of 2015 or during the first week of January.

“Further, our client is deeply disappointed to now learn that your client is not intending repaying the judgment interest to which our client is legally entitled.

“It has been clearly agreed that if our client would refrain from commencing execution proceedings on its judgment, that the entirety of our client's judgment would be repaid including the 7 per cent judgment interest according to law.”

Trying to secure funds: Charles Gosling, the Mayor of Hamilton, confirmed that discussions between Mexico Infrastructure Finance and the corporation were continuing (File photograph)

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Published January 13, 2016 at 8:00 am (Updated January 13, 2016 at 2:07 pm)

Firm threatens land sale over $18m debt

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