September 16, 2015
With no clear indication of how or when precisely Baha Mar intends to make good on a series of lease payments for its casino equipment, PDS Gaming-International, the Nevada-based gaming company leasing the bulk of the equipment for Baha mar's Las Vegas-style casino, yesterday reappeared before the U.S. Bankruptcy Court with renewed fervor demanding that Baha Mar deliver on their obligations or terminate its lease agreements immediately.
In a supplement to PDS' initial motion urging the U.S. courts to compel Baha Mar to accept or reject the terms of its master lease agreement along with two additional lease schedules, PDS' legal counsel yesterday charged that Baha Mar had not addressed any of the gaming company's concerns raised in its motion from August 3 and expressed fear that every missed payment could increase PDS' risk of loss.
The complaints come after the resort developers failed to make the $169,873 September lease payment under Lease Schedule One and an additional $172,221 payment under Lease Schedule Two, with PDS' concerns compounded by their assertion that Baha Mar has not amended its budget to "provide for any such payments to PDS under the Master Lease and accompanying Schedules."
PDS' renewed call for action comes shortly after PDS earlier eased its demands for Baha Mar to assume or reject the master lease and accompanying leases. In July PDS announced that it would "reluctantly" accept Baha Mar's 90-day timeline to decide whether to accept or reject its leases with PDS, but on the condition that Baha Mar provide for "timely" post-petition lease payments. That decision came after Baha Mar failed to make lease payments 60 days after filing for Chapter 11 bankruptcy protections on June 29, 2015.
PDS' Lease Schedule One required Baha Mar to pay interim rent of just over $59,000 monthly between March-May 2015, after which basic rent would increase to nearly $170,000 for four years. Lease Schedule Two began in March 2015 with interim rent of $105,542 from April-June 2015, after which it will raise to $172,221 for the remaining 48 months.
PDS Vice President Simon Burgess submitted a declaration alongside PDS' supplement, stating that he had conducted an inspection of the equipment installed in Baha Mar's casino on August 18, noting that the slot machines and other assorted equipment were "accounted for and in good condition" as Baha Mar's casino staff appeared engaged in a winding down process, which was projected to be completed by the end of August.
"The casino staff appeared to be in a wind-down process, which I was told will be completed by the end of August. I was told that unless there was a material change in the state of the Project in the immediate future, the staff intended to use vacation time beginning September and then take leave after vacation time was used up.
"Staff was not able to provide me with any information about what is expected after September 1, 2015; consequently, I do not know how the Lessees intend to preserve or protect the Equipment and operating system beginning September 1, 2015," read Burgess' declaration.
However, Burgess was not given access to the IT server room to inspect the casino's operating system, though he noted that system components were present in the machines at the time of his inspection.
Although the debtor-in-possession (DIP) lender approval is needed to modify Baha Mar's budget during the Chapter 11 proceedings, PDS' supplement stated that the gaming company was, "PDS is not aware of whether the Debtors sought any such approval from the DIP Lender or modification to their operational budget to permit payments to PDS. Nor does PDS know whether the DIP Lender consented (or would consent) to a budget modification that would permit the Debtors to make post-petition lease payments to PDS."
Should the U.S. court not require Baha Mar to accept or reject the terms of the lease agreements, PDS requested that the court order Baha Mar to make its lease payments as of September 1, 2015.
The supplement and declaration were filed as Delaware bankruptcy Court Judge Kevin Carey dismissed without prejudice the array of Chapter 11 bankruptcy cases for the 15 Baha Mar companies, save for Northshore Mainland Services, Inc., Baha Mar's sole U.S.-registered property. The dismissal motion for Northshore's Chapter 11 case filed by Baha Mar general contractor China Construction America, however, was denied.
The move now paves the way for all of Baha Mar's most pressing legal matters to fall under the purview of the Bahamian courts.
Baha Mar yesterday expressed disappointment in the decision but noted the U.S. court's view that the controversial Chapter 11 filings were made in good faith.
Click here to read more at The Nassau Guardian