Baha Mar on Wednesday filed a joint chapter 11 plan of reorganization of Northshore Mainland Services Inc. and its affiliated debtors and debtors in possession -- that is, the 15 Baha Mar companies seeking Chapter 11 protection under Northshore's aegis -- to show the U.S. Bankruptcy Court in Delaware how Baha Mar sees things playing out going forward without the winding up of the companies, but missing a vital piece of documentation designed to enable informed decision making about the plan itself.
The reorganization plan submitted is a series of very detailed parameters with no actual plan details included, and in it, Baha Mar encouraged all holders of claims or equity interests to "read the plan and the disclosure statement in their entirety before voting to accept or reject the plan". That disclosure statement, however, was not attached, and has not as yet been filed. Disclosure anticipated The disclosure statement is a required document in Chapter 11 bankruptcy, designed to provide creditors with adequate information about the debtors affairs to promote an informed decision about a proposed reorganization plan.
The statement, once filed, must be approved or rejected by the court. In most cases, one expert notes, a reorganization plan cannot be accepted or rejected until the court first approves the disclosure statement. Typical items found in a disclosure statement include the history of the debtor and the circumstances that caused the bankruptcy filing, a summary of the reorganization plan, a description and value of the debtor's assets, a description of claims and liabilities and how they are treated in the plan, tax consequences of the reorganization plan, and any other information necessary for creditors to make an informed judgment about the plan.
In a separate motion asking Judge Kevin Carey for leave to file the so-called reorganization plan without the disclosure statement, Baha Mar counsel Laura Davis Jones said her clients anticipated filing a disclosure statement in the near term. "In addition to operating their businesses in Chapter 11, the debtors have had to devote significant efforts to, including, without limitation, (i) negotiating, documenting, and implementing the debtors' debtor-in-possession financing; (ii) objecting to motions to dismiss the Chapter 11 cases and responding to (and propounding) related discovery requests, (iii) retaining necessary professional advisors, (iv) preparing for and filing pleadings in the various proceedings in The Bahamas, including the hearing on the winding-up application, and (v) attending court hearings both in this court and the Supreme Court of The Bahamas on the winding-up application pending in that court, as necessary,"
Jones argued. "Additionally, for many weeks, much of the debtors' resources and attention were primarily dedicated to the multi-party negotiations in Beijing, China in the hope of obtaining a consensual resolution of the issues that precipitated the commencement of the Chapter 11 cases," she added. "Nevertheless, the debtors have been able to formulate the plan and seek to file it at this time without concurrently filing the disclosure statement to provide the court with insight regarding the debtors' vision of the forward progression of the Chapter 11 cases. "To date, the debtors have not been able to complete a disclosure statement to accompany the plan due to the urgency of matters described above, but currently anticipate completing and filing the disclosure statement in the near term," Jones said.
Elements of a plan The filing by Baha Mar noted that the plan constitutes a separate plan of reorganization for each debtor entity, and notes that holders of claims and equity interests may refer to the forthcoming disclosure statement for a discussion of the debtors' history, businesses, assets, results of operations, historical financial information, and projections of future operations, as well as a summary and description of the plan. Another important element of the filing is the note concerning sources of consideration for plan distributions, which points out that, except as otherwise provided in the plan or the confirmation order -- that is, the order of the bankruptcy court confirming the plan -- all cash consideration necessary for the reorganized debtors to make plan distributions shall be obtained from existing cash balances, the operations of the debtors or the reorganized debtors, or the exit financing.
Baha Mar's vision The developer -- in a separate press statement touting the filing -- said filing the "plan" is an important step in Baha Mar's restructuring efforts. "The plan presents a viable framework for Baha Mar's emergence from Chapter 11 and the expeditious resumption and completion of the construction of Baha Mar. Most notably, the plan provides that valid claims of Bahamian creditors and the Government of the Bahamas will be unaffected by the Chapter 11 and, upon implementation of the plan, would be paid in the ordinary course of business," the release said. Baha Mar again asserted that its priority is to "complete the resort's construction properly and open successfully as soon as possible," although when exactly that might be continues to be difficult to pin down as the legal strategems continue to play out in both Nassau and Delaware courts.
The plan is, Baha Mar said, is structured to enable Baha Mar to "complete the resort's construction properly and open successfully as soon as possible ... Once completed, Baha Mar is projected to generate nearly 5,000 new jobs in The Bahamas and have an annual payroll in excess of $130 million, representing nearly 12 percent of the GDP of The Bahamas."
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