SUPREME Court judge, Justice David Batts on Friday ruled that a January 2023 application made for the sale of bankrupt adventure tour company Mystic Mountain Limited (MML) can proceed.
Deals expert Wilfred Baghaloo, who was appointed receiver in February last year by secured creditor and bondholder Sky-High Holdings Limited, after the company defaulted on its debt for a long period, had asked the court’s guidance as to whether or not he could proceed with the sale given the various concerns expressed by the shareholders.
His appointment had come after a year-long fight in which directors of Mystic Mountain tried to come to an agreement with creditors under the Insolvency Act. Sky High Holdings Ltd (the secured creditor) owns 100 per cent of MML’s senior secured fixed rate bonds in the principal amount of $1.1 billion.
On Friday Justice Batts, in handing down the ruling in the first of seven orders, said, “My order is that the sale of the business and assets of Mystic Mountain Limited, including the current leases between Mystic Mountain and lessors Jamaica Bauxite Mining Company and the Urban Development Corporation, upon the terms and conditions set forth in the agreement for sale dated January 19th, 2023 to the purchasers named therein and duly executed by the parties thereto, is hereby approved.”
In making several orders relating to costs Justice Batts said, among other things, that the cost of filing and preparation of the claim; all applications and affidavits in support and in answer and in reply; as well as the cost of all hearing, mention, and trial dates up to and including the second day of August 2022 are to be borne by the estate of Mystic Mountain.
Baghaloo, in responding to questions from the Jamaica Observer, said the court ruling had cleared the way for him to “now commence the process of fulfilling the conditions of the sale, which will require some time (maybe two months)”.
Baghaloo, shortly after his appointment, had proceeded to seek a buyer for the assets and operation of the company. After a lengthy process, including advertising the business for sale globally, regionally and locally— including targeting approximately 40 private companies — a preferred buyer was selected in July 2022. However, the trustee and a group of shareholders objected to the sale to the preferred buyer.
Baghaloo, in January 2022, challenged their objections by asking the court for its guidance on the matter.
“After one year of affidavits, et cetera, the court made its judgment today that I, as receiver, should proceed with sale, and in summary is agreeing that proper process and considerations were given by me in selecting the preferred buyer. I thank the court for working during the period of recess [the judge’s vacation time] and to the numerous creditors, our workers, other stakeholders, and the preferred bidder for their enormous patience,” he told the Observer.
“The sale has been delayed for a long time and so I would like to say thanks. It was my expectation to have this matter closed from September of last year so you will appreciate the anxiety of all the relevant stakeholders,” he added.
In relation to the orders for costs made by Justice Batts, Baghaloo said, “The estate must bear some costs, but the costs for the hearings and work that goes into those hearings are the costs of the trustee, and not the estate. This is a matter the lawyer, and maybe the judge, will have to clear up in the future. This will require further clarification since the ruling may have a significant impact on the insolvency practice in the future.”
He, in the meantime, said the case was “one of the most complex and difficult” he has seen in his 20 plus years of practice.
Meanwhile, attorney Dr Christopher Malcolm, who headed the legal team appearing for Mystic Mountain Limited’s trustee Debbie-Ann Gordon, said with the court green-lighting the application for the sale of the entity and its assets, it is now left for his client “to consider the best interests of the estate as well as the 200 plus creditors involved and how it is that the matter is to be taken forward, including any applications that she may consider appropriate”.
Bankruptcy proceedings for the adventure outfit began in January 2021 after the economic fallout from the COVID-19 pandemic. Mystic Mountain was opened in 2008 with financing from the Development Bank of Jamaica and private investors including American Michael Drakulich and his colleague, former politician and Government Minister Horace Clarke.
Mystic Mountain is one of the top attractions in Ocho Rios. Activities include ziplining, bobsledding and bird watching.