Baha Mar's controversial Chapter 11 bankruptcy application[1] reveals that we do not currently know the real owner of Baha Mar, and that there is a lot more to the story than the Bahamian people were led to believe. Baha Mar's corporate structure was first described by K. Quincy Parker in his piece entitled ‘Baha Mar liabilities approximately $2.7B.’[2]

The President of Baha Mar Ltd. Thomas Dunlap made a declaration supporting the bankruptcy application on June 29^th, which shows that Baha Mar Ltd. is not the ultimate owner of the Baha Mar project. Although Baha Mar Ltd. does own many subsidiaries including Baha Mar Land Holdings Ltd. and Baha Mar Operating Company Ltd., the reality is that it is itself owned by BML Properties Ltd. (“BML”), a previously unknown company to most followers of the Baha Mar saga.

So who really owns BML?

It appears that BML is registered as an International Business Company (IBC) in the Bahamas. Although this information does not tell us more about who the decision makers really are, the bankruptcy filing does.

Mr. Dunlap stated in his declaration before the United States Bankruptcy Court in Delaware that “the majority of the common shares of BML... are ultimately owned for the benefit of, among others, the Developer.”[3] [emphasis added] According to his declaration, the Developer is Mr. Sarkis Izmirlian, Chairman and CEO of Baha Mar Ltd.

However, it is unclear whether Mr. Izmirlian owns most of the common shares. Although the owner of the common shares ultimately makes the decisions, the declaration states that he is a majority shareholder “among others.” It does not say who the other owners are or how many shares they possess. This sentence in the 49-page declaration is revealing and raises suspicion because it suggests that Mr. Izmirlian does not own the majority of the shares of BML (and therefore Baha Mar), but rather shares this majority stake with other unknown shareholders.

 
Even if Mr. Izmirlian did own 51% of the common shares of BML, giving him a majority stake, another shareholder may hold the remaining 49%. If that were to be the case, the other shareholder would likely be quite powerful in any type of negotiations with the government, China State Construction Engineering Corporation and the China Export-Import Bank. It cannot be ignored that a non-Bahamian may own the remaining shares, and may be making decisions for the country of which we are simply unaware. Alternatively, the government itself may be that very shareholder.

In light of the recent filing by the Bahamian government for the company's liquidation on July 16^th, we have come to understand that the government wants to take the winding-up process out of Mr. Izmirlian's control.[4] The government's ability to do this raises questions about its stake in the Baha Mar project, which leads me to several important questions:

The Bahamian government and Baha Mar should publicly identify the owner(s) of all of the common shares in BML Properties Ltd. The Bahamian people have a right to know.

It is also unclear who owns the preferred stock in BML. The preferred stockholder has a higher claim on assets and earnings than common shareholders. In the case of the bankruptcy of Baha Mar where it will be required to sell all of its assets and pay off its debts, the preferred shareholder will receive repayment before the common shareholders. BML is an IBC, which means that those preferred shares could, again, very well be held by a non-Bahamian.

So, for now, we have no answer to the question of who really owns the ‘largest single-phase development in Caribbean history.’ All we can do is speculate. BML owns an office in Florida[5], which raises the question of whether the preferred shareholder(s) and other common shareholder(s) are American. BML also leases an office in Hong Kong.[6] Although the Hong Kong company registry does not appear to have BML Properties registered there, we may be inclined to ask whether any Chinese investors hold these shares.

Considering the grave consequences that the Baha Mar Project's failure could have on the Bahamian economy, it would be helpful if the murkiness surrounding who really owns BML Properties Ltd. is cleared up. It would allow us to understand the stakes and to see for ourselves who the faces behind this daunting corporate structure really are.

Disclaimer: These views represent those of the author. Kendra Hefti-Rossier is a fourth-year student at the McGill Faculty of Law focusing on corporate taxation and development.