Mystic Mountain’s majority shareholder asks for rehabilitation of company
Published:Sunday | April 23, 2023 | 12:24 AMAvia Collinder - Business Reporter
DEBBIE ANN Gordon, appointed Trustee in Bankruptcy for Mystic Mountain Limited -- the attraction company that is going through insolvency proceedings - disclosed in a creditor’s report issued in March that she was in receipt of a request from Karibukai, Mystic Mountain Limited’s sole shareholder and/or Rainforest Adventures Limited, the majority shareholder of Karibukai, for the rehabilitation of the company.
The creditors’ report, dated March 23, 2023, was issued by the Trustee to creditors and outlines: “The request was for me to redeem the security of Sky-High Holdings as secured creditor of Mystic Mountain by way of settlement of the liabilities pursuant to Section 194 of the Insolvency Act.
“The shareholders further stated that they required, amongst other things, a value of the security held by the secured creditor.”
Gordon outlined, however: “This latter information, I have not been able to provide as that information remains outstanding from the secured creditor. By law, a Trustee may redeem security on payment of the security as assessed in the proof of claim of the secured creditor.
“Since neither full particulars of the security, including the date and the value of the security as assessed by the secured creditor, were disclosed in its proof of claim, I wrote to the secured creditor requesting the same.
“The secured creditor has not responded to the last notice issued by me on November 3, 2022, requesting the particulars of security or proof of security.”
The shareholder’s attorneys have since advised, the report stated, that they hold approximately US$1.3 million in available funds, which, subject to certain conditions, they wish to apply in support of the debt-redemption process of Mystic Mountain.
Another communication to creditors, issued via press notice in April by the Trustee, also shared that the secured creditor of Mystic Mountain had not established its security to the satisfaction of the Trustee.
Accordingly, it was noted, the secured creditor’s standing “in priority”, in relation to other creditors, remained in question.
Questionable claims
Priority claims are those claims of proven creditors that rank ahead of, and are payable before, and in satisfaction of all other creditors of the company in bankruptcy.
The creditors report published in March commented: “A search by the Trustee of the Security Interest in Personal Property Register revealed several registrations against the company. The Insolvency Act and the Security Interest In Personal Property Act set out the requirements that a secured creditor claiming priority ahead of other creditors must meet in order to realise on its security or to vote on a proposal in a bankruptcy.”
Gordon also said that of five Inspector claims against Mystic Mountain, only one has been admitted to date, and the other four have been advised, it was noted, of the Trustee’s reasons for non-admittance to date.
Asked to explain further her dissatisfaction, Gordon said: “The ranking of claims is outlined by the Insolvency law and NOT by the Trustee. The law prescribes the conduct of the Trustee where a creditor fails to submit documents to prove their claim or priority standing. Any contrary action of the Trustee would be unlawful. The law also gives the right to any person to seek relief from the Courts.”
The creditor’s report outlines the status of creditor claims (maintaining confidentiality), the major work of the Trustee, and all happenings in the bankruptcy since appointment in August 2022.
Gordon commented in the report: “Approximately 150 named creditors were handed over to me by the former Trustee and Receiver.
“None of these creditors were proven by the former Trustee and Receiver. To date, not all creditors have completed their claim process.”
Gordon concluded: “As Trustee and as an officer of the Court, I continue to ensure that the law is complied with and that the interests of all relevant stakeholders - creditors, debtors, shareholders/investors, and the public alike are protected. The Trustee welcomes any enquiry. A meeting with the Trustee is free, confidential, and unbiased.”
Among the duties of the Trustees, as outlined in the report, is preparation for the dissolution of Mystic Mountain in the event that the company will not be restored, or to take other action contemplated by the Insolvency Act.
The Trustee also has the responsibility to store/keep books, records, and documents relating to the administration of the estate administered by the Trustee for at least seven years, during which period claims may be brought against the estate.
The report states: “The secured creditor is required under law to prove its security as valid and enforceable as between the company and the secured creditor, and further that it has priority over the Trustee, neither of which I can say has been confirmed to date. The Trustee is bound to verify these matters prior to disposal of the collateral by the secured creditor, as otherwise an unproven secured creditor may enjoy an unlawful preference to the prejudice of all other creditors and the debtor.”
The case is set to be heard in the Supreme Court on May 1 and May 4, 2023.