ON Wednesday of this week, Wilfred Baghaloo, managing director at PricewaterhouseCoopers Tax and Advisory Services Limited in Jamaica, was appointed as receiver of Mystic Mountain Limited (MML), a St Ann-based attractions company which has been trying to strike a deal with its creditors.

Default on payments followed the onset of the novel coronavirus pandemic in March 2020 due to the fallout faced by the tourism industry.

Baghaloo’s appointment as receiver follows the rejection of a proposal made by the MML through the appointed trustee to all creditors, both secured and unsecured, at a meeting on February 8, 2022.

Under the Insolvency Act, the rejection resulted in MML making an assignment and a lifting of the stay.

The appointment follows a year-long fight in which directors of Mystic Mountain tried to come to an agreement with creditors under the Insolvency Act.

As outlined, 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.

MML (the debtor) failed to make principal and interest payments on those bonds resulting in the full amount becoming due on the January 26, 2021. Consequently, the debtor filed a Notice of Intention to file a proposal, pursuant to section 11 of the Insolvency Act, which was served on the February 3, 2021.

The Notice of Intention imposed a stay of proceedings and prevented the secured creditor from enforcing its security. The trustee for the debtor was Caydion Campbell, who, by letter dated February 4, 2021, wrote to all the creditors and informed them that the proposal would only be made to one class as it was a secured creditor only proposal.

Campbell oversaw and assisted in the formulation of two proposals, both of which were secured creditors only proposals. Both were notified to the Companies Office of Jamaica and filed with the Office of the Supervisor of Insolvency.

Campbell pursuant to his duties under Section 19 of the Insolvency Act, and after several extensions, convened a meeting for the August 9, 2021 to which only the secured creditor was invited. At that meeting a proxy for the sole secured creditor, being JCSD Trustee Services Ltd (the bondholders trustee), voted to reject the proposal.

Campbell moved for an alternative proposal to be considered which he called an “amended proposal”. It was at this point that the Supervisor of Insolvency intervened and raised a query about the absence of unsecured creditors.

In a January 18, 2022 hearing in the Supreme Court, Justice David Batts ruled that, “ where a proposal is made to secured creditors or a class of secured creditors, notice of the meeting to consider the proposal is to be given to all creditors known to the trustee.

He added, “ It is further declared that the meeting of creditors held in this matter to consider a proposal on the August 9, 2021 to which only the secured creditors to whom the proposal was made were invited was irregular and not a properly convened meeting.”

The trustee was therefore directed, pursuant to Sections 277 and 280 of the Insolvency Act, to convene a meeting of creditors to consider the proposal and any amendments within 21 days of the date of the judgement. This meeting was held on February 8.

As receiver Baghaloo will take control of the assets of MML as indicated under the debenture agreement; review the company’s current financial affairs; and convene discussions with the trustee and the company’s officers regarding matters of importance, including operational status.

The receiver will also submit the required reports to the appointers and the necessary regulatory agencies.

Baghaloo told the Jamaica Observer, “Until further notice, Mystic Mountain remains open to the public for business to continue as usual.”