relief may have been obtained which would (a) recognize the right of a foreign representative to act in The Bahamas on behalf of or in the name of the debtor and, in the court’s discretion to do so jointly with a qualified insolvency practitioner; (b) enjoining the commencement or staying the continuation of legal proceedings against a debtor; (c) staying the enforcement of any judgment against a debtor; (d) requiring a person in possession of information relating to the business or affairs of a debtor to be examined by and produce documents to its foreign representative; (e) ordering the turnover to a foreign representative of any property belonging to a debtor, and; (f) granting such other relief as it considers appropriate. Although there is an express exclusion which was pertinent to the Baha Mar case that an ancillary order shall not affect the right of a secured creditor to take possession of and realize or otherwise deal with property of the debtor over which the creditor has a security interest. CEXIM, the lender as secured creditor would have been precluded from exercising such a right which would be deemed to be contrary to public policy in contravention of the statute.
Hence, even if the Bahamian court recognized the US insolvency proceedings, it could not grant assistance in the terms sought because it had no inherent power to order assistance which would be tantamount to an injunction of, and amount to interference with the lender’s rights. In the US, Chapter 11 provides a means to preserve business operations and is seen as a flexible restructuring tool given that the debtor is able to retain management and debtor- in-possession financing is available, however, the legal system in The Bahamas is based on the English common law principles which lean towards a creditor based system as opposed to debtor-friendly system as is the Chapter 11 mechanism.
The lender as secured creditor was therefore able to appoint receivers over the assets of the Baha Mar Companies and is entitled to enforce its security as it is empowered to do so under the Debenture which is governed by Bahamian law.
Relevant Foreign Countries to Which International Cooperation Extends under Bahamian Law
Another hurdle to the recognition of the Chapter 11 proceedings in The Bahamas was that at the time of the application The Bahamas had not yet designated a list of relevant foreign countries to which the statutory enactment to grant aid to foreign representatives was intended to extend.
Further, the fact that there was no list of countries to whom such assistance could extend appeared to thwart the statutory power. Quite possibly, if the US was on the list, recognition of a foreign representative may have been possible.
Furthermore, the Judge took the view that such assistance was no longer available to foreign officeholders at common law since it had been abrogated by statute. This approach was followed in another case by involving recognition sought by liquidators of Caledonian Bank, a Cayman Bank subject to liquidation proceedings there, in which recognition orders had been obtained in the US, England, Ireland, and Australia but such recognition was thwarted in The Bahamas.
This case provides an example of the treatment of cross-border proceedings and the issues which may arise. Both the US Courts and the Bahamian Courts had an opportunity to fully assess the parameters of their respective legislation