Court to rule on Mystic Mountain sale in a week, 20 creditors recognised
In a week, Justice David Batts is expected to tell Mystic Mountain receiver Wilfred Baghaloo whether he can proceed with the sale of the Ocho Rios-based adventure tour company that went bankrupt during the pandemic and is in the hands of its...
In a week, Justice David Batts is expected to tell Mystic Mountain receiver Wilfred Baghaloo whether he can proceed with the sale of the Ocho Rios-based adventure tour company that went bankrupt during the pandemic and is in the hands of its creditors.
Hearings in the case were held on Wednesday and Thursday at the Supreme Court, days after Batts approved an amended list of creditors who will be allowed to claim compensation once the business is sold.
The secured creditor Sky High Holdings Limited is owed $1.1 billion and is expected to get a full payout on the bonds it holds. Another 20 unsecured creditors have been recognised by the court, which means they may be considered for compensation out of whatever funds are left over after certain obligations of the receivership are met. The largest of the unsecured creditors is Sygnus Credit Investments Limited, which is owed US$1 million, or about $155 million at current exchange rates.
Justice Batts separately approved Sygnus as an unsecured creditor, and then last Friday, he signed off on an amended list that had another 19 persons and businesses on it, among them Mystic Mountain co-founder and former chairman Michael Drakulich over severance pay, and former service providers, such as FosRich; National Parks Management Consulting Limited, which is owned by Drakulich; McCalla Construction; Security Innovation; and Pear Tree Press. The list also includes Hart Muirhead Fatta, however, the law firm declined to say why its name was included, but did indicate to the Financial Gleaner that it would speak to the issue after the wrap up of the court hearings.
The total value of the claims by the 19 unsecured creditors was not stated in the judge’s order. They were represented in court by attorney Janet Morrison of Hart Muirhead Fatta; while Sygnus’ claim was previously argued by attorneys Kwame Gordon and Matthew McAnuff-Jones of the law firm Samuda & Johnson.
The approval of sale is just the latest in a series of matters adjudicated by the court relating to the Mystic Mountain bankruptcy. Lawyers in the case have indicated that the court-sanctioned list is a fraction of the actual number of creditors, which was said to be in the order of about 150 to 200.
Baghaloo, from the auditing and advisory firm PricewaterhouseCoopers Jamaica, was appointed as receiver over Mystic Mountain Limited in bankruptcy in February 2022, after the company defaulted on its bonds.
The receiver has indicated since August 2022 that he has a credible offer for the attraction. The court is to make a pronouncement on the sale process, in order for the deal to proceed; and hearings in the matter this week were to include presentations from the receiver, secured creditor, other creditors, the committee of inspectors overseeing the bankruptcy, and the Mystic Mountain trustee.
As a pool of the inspectors see it, the sale is being challenged by the trustee on the basis of whether the receiver had obtained the best price from the prospective buyer and the process by which the preferred bid was selected.
However, the inspectors, who represent unsecured creditors, contended in a submission on Wednesday that “bankruptcy proceedings were not designed to interfere with a secured creditor’s power to sell property over which it holds a security” and urged the court to allow the transaction to proceed. They were represented by the law firm Samuda & Johnson.
Justice Batts is expected to hand down his decision on or around August 18.