Mystic Mountain sale needs court’s nod, legal action drags on
There is yet no immediate end in sight for continuing litigation involving the bankrupt Mystic Mountain Limited, MML, despite the Supreme Court ruling last week that receiver Wilfred Baghaloo can go ahead with the planned sale of assets of the company, subject to the sale agreement being expressly approved by the court.
As the ruling requiring court approval of the pending sale was handed down in the commercial division of the Supreme Court by presiding judge David Batts on November 11, a February 23, 2023 date was being set by the judge to hear an action filed by MML trustee Debbie-Ann Gordon seeking disclosure by Baghaloo of financial and other information pertaining to the MML estate.
The assets involve the equipment and operations of the Mystic Mountain Rainforest Adventures attraction, which remains open and continues to welcome visitors in Ocho Rios. The condition attached to the sale followed Batts’ effective greenlighting of the planned transaction a week earlier with the dismissal of an application for the extension of a temporary injunction, that was secured on September 14, halting the asset disposal process.
The temporary injunction had been secured by majority shareholders of MML, who had alleged improper procedures by the receiver with regard to the planned sale.
In court, through her lawyer Dr Christopher Malcolm, and in comments to the Financial Gleaner, Gordon said her motive was not to prolong litigation in the matter, which has been before the court at various points and for a number of reasons since the bankruptcy proceedings started in January 2021.
“As an officer of the court, I have a fiduciary duty to all creditors and shareholders of Mystic Mountain Limited to see to the realisation of their interests through the best possible outcome in this matter. To do so, the Insolvency Act requires me to do certain things,” said Gordon.
“I must have a complete statement of accounts, and I must also ensure that all creditors’ claims on the estate are proven. This includes secured and unsecured creditors. I must follow the strictures of the law. Failure to do so could make me personally liable to make whole the estate,” the trustee told the Financial Gleaner in an interview on the margins of last week’s court hearing.
Meanwhile, Baghaloo, through his lawyers, informed the court that requests for information from the trustee have been satisfied. Baghaloo was appointed receiver in February by secured creditor and bondholder Sky-High Holdings Limited, and was for a few months up to August also trustee of the MML estate. Previous MML-appointed trustee Caydion Campbell had been removed from the position by the company’s creditors.
Following concerns about a possible conflict of interest with him performing both roles, Baghaloo, the managing director of PricewaterhouseCoopers Jamaica, resigned as trustee and Gordon was recently appointed by the creditors to fill the role.
The trustee, who was named as a respondent in the injunction suit, had not expressed a position on the matter of whether the court should have lifted or extended the injunction.
However, her requests for information and the latest court filing at the suggestion of the judge, who declined to hear full arguments pertaining to her information requests during the injunction hearing, are being viewed by some creditors as a protraction of the court proceedings and a delaying of the potential sale and realisation of money to pay MML’s debts.
Baghaloo is hopeful that the requirement for the court’s stamp of approval of the sale will expedite the process and add to its transparency.
“It is my sincere expectation that it will assist the sale process greatly, by reducing the unnecessary ‘noise’ surrounding the sale,” he told the Financial Gleaner in emailed comments this week.
While continuing to decline to name the preferred bidder negotiating to buy the assets, Baghaloo said the process to get the sale agreement before the court was being driven by attorneys for the receiver and the buyer. The Financial Gleaner has learned that attractions operator Dolphin Cove Limited, whose lawyers were present in court for the hearing of the injunction matter, is seeking to buy Mystic Mountain.
“I am hoping this will happen quickly, but the lawyers will have to agree to the language to be inserted in the sale agreement, as recommended by the judge,” Baghaloo said, also declining to give a timeline for the agreement to be placed before the court for approval.
In relation to the action filed by the trustee and her requests for information, Baghaloo indicated in his response to the Financial Gleaner a willingness to cooperate.
“I am not sure of the specific details of the trustee’s current request(s). We will continue to work with the current trustee by ensuring a timely response to her request(s)/communications. Obviously, it is to our mutual benefit that we ensure a smooth process. We are fully available to assist 100 per cent, depending on the needs of the trustee and the relevant creditors. Once the specific request(s) are made we will comply on a timely basis,” he said via email.
“I hope that with the substantive court matters behind us, we will be able to complete the sale, subject to the court’s guidance, to the satisfaction of all stakeholders, including the secured creditor(s), the employees and (other) creditors. It has been a tough couple months for them. I thank them for their patience in this matter,” Baghaloo added.