Fri | Sep 29, 2023

D-day for Mystic Mountain sale battle

Published:Friday | November 4, 2022 | 12:11 AMHuntley Medley - Associate Business Editor
The Supreme Court building in Kingston.
The Supreme Court building in Kingston.

Supreme Court Justice David Batts is to hand down his decision this morning in the contentious legal tussle in which the majority shareholders in Mystic Mountain Limited, MML, the bankrupt company that owns the Mystic Mountain attraction in Ocho Rios, are seeking to stop receiver Wilfred Baghaloo from selling the facility’s assets.

The assets sale is aimed at recouping some $1.3 billion owed to bondholders and additional sums owed to several unsecured creditors. At the same time, the number of unpaid, unsecured creditors is growing, with law firm Myers Fletcher and Gordon, MFG, which represented MML and its owners in previous rounds of litigation, recently having filed claims for unpaid legal fees.

It emerged this week that listed company Dolphin Cove Limited, the owner of another attraction with operations in Ocho Rios and elsewhere, is hoping to buy the assets and possibly run Mystic Mountain.

Attorneys for the parties in the injunction suit – claimant Karibukai, a St Lucia-registered holding company, which is the parent company of MML; and the respondents, who are Sky-High Holdings, the bondholders, as well as Baghaloo and newly appointed trustee Debbie-Ann Gordon – wrapped up submissions and responses to opposing counsel before Batts on Wednesday.

Karibukai, which secured a temporary injunction halting the sale on September 15, is seeking to have the injunction extended, giving it time to file a new proposal to pay off the bond or to have the opportunity for its parent company Rainforest Adventures Holdings Limited, RFA, to buy back the assets, RFA having submitted two bids in the open- biding process administered by the receiver, it emerged in court documents and oral pleadings. It appears that RFA was not selected as the preferred bidder, which has not been named.

Baghaloo, of accounting and tax advisory firm PricewaterhouseCoopers Jamaica, was appointed receiver by Sky-High in February this year after MML was certified bankrupt by the state-run Office of the Supervisor of Insolvency, following a lengthy insolvency process that was rife with court actions and counteractions. The insolvency proceedings, which started in January 2021, arose from the failure of MML to meet bond interest and principal payments that became due in December 2020.

Sky-High had been previously restrained under the stipulations of the Insolvency Act from moving to realise their security, while MML exhausted the provisions of the insolvency process, leading up to the rejection of a revised payment proposal from MML by the secured and unsecured creditors at a February 8 meeting this year. The February meeting was a rerun of a required creditors meeting that was initially held in August last year, but which was declared null and void by Batts following an application to the court for clarification by former MML-appointed trustee Caydion Campbell, on the recommendation of Supervisor of Insolvency and Government Trustee, retired Supreme Court judge Ferdinand Smith.

Minority shareholders of Karibukai have not joined in the latest suit seeking the injunction. The matter has effectively been pursued by Karibukai’s majority shareholders, RFA, an international business company registered in the British Virgin Islands. The claimants have raised issues surrounding the conduct of the receiver and have called into question the transparency of the sale process.

Lawyers for Baghaloo and Sky-High have opposed the extension of the injunction and its temporary imposition in the first place, noting that the sale is being conducted according to the Insolvency Act and in keeping with previous declarations by the court. They assert that the latest legal action is an attempt to relitigate issues already decided by the court.

Lawyers for the trustee, who has a responsibility to see to the proper management of the MML estate, particularly on behalf of unsecured creditors, have not explicitly supported an extension of the injunction. They have, however, alleged that nondisclosure of financial and other information by Baghaloo in his handover of the trusteeship, which he held briefly up to around August this year, is preventing the current trustee from fulfilling her responsibilities.

Karibukai is represented by Caroline Hay, KC, on behalf of law firm Ramsay and Partners. John Vassell, KC, leads Baghaloo’s representation by law firm DunnCox. Carlene Larmond, KC, heads the team from law firm Patterson Mair Hamilton representing Sky-High, while Dr Christopher Malcolm appeared for Gordon.