Bobby supports Butch Stewart’s US family in distribution of father’s multibillion-dollar estate

Robert ‘Bobby’ Stewart, a member of the Jamaican family of late hotelier Gordon ‘Butch’ Stewart, is making it clear that he supports his father’s United States family on how assets such as the Sandals Group should be distributed.

The recent publication of several Bahamian court decisions revealed a disputed last “wish” by Butch that would strip his son and executive chairman, Adam Stewart, of significant say in the Sandals hotel chain.

According to Butch’s common-law American widow Cheryl Hammersmith-Stewart, the wishes give the late mogul’s US family, as a unit, the largest stake in Sandals Resorts International, court documents seen by The Sunday Gleaner reveal.

But Adam has raised serious doubts about what he called the “alleged wishes” of his dad.

Bobby’s attorneys wrote to The Sunday Gleaner, saying that the stories published in last week’s edition “give the erroneous impression that the position taken by Adam in the litigation in The Bahamas represents the position of all the members of the Jamaican family”.

“As the written judgments and in particular the judgment of Winder CJ (Chief Justice) disclose, Jaime Stewart McConnell and Brian Jardim support Adam’s case. The other five defendants in the action, including our client, Robert, support Cheryl Hammersmith-Stewart’s case,” noted a letter from King’s Counsel Symone Mayhew.

The lawyer said it was important to “distinguish between the beneficiaries who oppose the wishes of Stewart and the beneficiaries who fully embrace his wishes”.

Butch, 79, died on January 4, 2021. He reportedly gave instructions just before his death that the shares of asset-holding companies in two Bahamian trusts be transferred into five newly established trusts for his family.

That means one trust for his US family (Cheryl and their three adult children – Gordon, Kelly and Sabrina); and one each for the Jamaican family members – Adam, his sister Jaime Stewart-McConnell and brothers Brian Jardim and Bobby.

Butch reportedly said the shares should be transferred on a proportional basis – the US family getting 42 per cent; Adam 16.67 per cent; Bobby 16.67 per cent; Jaime 16.66 per cent; and Brian eight per cent.

Along with that distribution, it was also disclosed that Butch allegedly wished for the US family to receive veto shares equal in the parent companies of the business and that the parent companies be the subject of a shareholders’ agreement which would give the US and Jamaican families “balanced representation on the boards”.

The arrangement would impact control of Sandals, the principal asset in the Coral Ridge Trust, one of the two Bahamian trusts. The other is the Hightree Trust. Most of the non-hotel businesses, including the ATL Group and the Jamaica Observer, are dealt with in his will.

In 2019, Bloomberg reported that the hotel chain could fetch as much as US$4.5 billion in a sale.

NOT BUTCH’S INTENTION

Butch established private company Cromwell Trust as trustee of the two trusts. A trust is a legal entity through which a person gives another party, a trustee, rights to administer assets for a beneficiary.

Coral Ridge has an advisory board made up of Adam and Jaime, who have sole authority over the Sandals business. The wishes would shift the balance of power.

The original beneficiaries of the trusts when they were established in 2001 were Butch Stewart, Adam, Jaime and Bobby, and their future children. Bobby was removed in 2003.

In August 2018, Bobby was reinstated and Cheryl and her three children with Butch added. Brian was added in July 2021.

Adam, 43, was named Sandals CEO in 2006. He took over as executive chairman when his father died.

“It was never my father’s intention to benefit each member of his family equally and in 2001 when he set up the two trusts, he was most insistent that only Bobby, Jaime, and I would be beneficiaries of his trusts and he would provide for his US family out of life insurance,” Adam said in an affidavit.

He also argued that even when the US family was added to the trust, “it was not his (Butch’s) intention that the US family would benefit equally with Jaime, Bobby and me”.

Cheryl, the court said, is relying on a memorandum that Butch signed on January 3, 2021, a day before his death. The document was prepared by Butch’s personal attorney Trevor Patterson.

But Adam is disputing his father’s “alleged wishes”, including the memorandum which he noted was “prepared (with the plaintiff’s [Cheryl’s] involvement) just one day before my father passed away” after a battle with cancer.

When Adam and the group that supported him also alleged that the Bahamian Supreme Court made wrong findings of fact, Justice Winder hit back in a 2022 decision.

“As it is the court’s role to make factual findings, to the extent that facts are disputed between the parties, then what is expressed ought to be taken as positive finding of fact, having considered the totality of evidence, including the documentary evidence,” said the judge, responding to the assertion that the court’s account of the case was identical to Cheryl’s assertions.

ADAM DENIES CLAIMS

Cheryl also contends in the court documents that a Sandals attorney reached out to her in June 2021 for her to receive a presentation on the sale of the US family’s promised 42 per cent stake in the Sandals Group. Those talks failed.

Talks also failed about how to deal with a 2019 wish by Butch for the US family to receive US$100 million in cash after his death.

Adam has denied many of Cheryl’s claims but said he would address them in his defence against her main claim.

In September 2021, Cheryl filed a lawsuit for the removal of Cromwell Trust Company, on allegations that it was involved in conflicts of interest and may not implement Butch’s wishes.

Adam, Jaime and Brian tried to get the court to keep the documents private but lost at every level of the court system.

Before proceeding with her substantive claim against the trust, which is still to be decided, Cheryl asked the court for a declaration that her claim did not engage a ‘no contest’ clause that Butch included in his trusts and will.

The ‘no contest’ provision gives the trustee the power to remove any beneficiary who challenges Butch’s wishes in court.

Adam argued that Cheryl’s claim did invoke the ‘no contest’ clause and is an “attack” on the structure of the trusts.

But the court ruled that Cheryl’s lawsuit against Cromwell was not a claim that fell within the remit of the clause and which could disqualify her from being a beneficiary. It also said that the role of the advisory board in managing Sandals would not be affected.

A ruling by the Privy Council last December has resulted in Cheryl’s main claim resuming in the Bahamian courts.

The 42-year-old Sandals Resorts International is the leading all-inclusive hotel group in the Caribbean and is key to tourism-dependent economies in the region. In Jamaica, it is one of the largest private employers and foreign exchange earners.

editorial@gleanerjm.com