Adam Stewart challenges Butch’s alleged last wish for Sandals.

Gordon ‘Butch’ Stewart, the late hotelier, has made a disputed last “wish” that his son and executive chairman of Sandals Resorts International, Adam Stewart, would be stripped of significant say in the hotel chain.

The wishes, as reported by Butch’s common-law widow Cheryl Hammersmith-Stewart, would give the United States-based family of the late mogul, as a unit, the largest stake in the company.

According to court documents, Butch had given instructions before his death to transfer the shares of asset-holding companies in two Bahamian trusts into five newly established trusts for his family.

This would mean one trust for his US family, Cheryl, and their three adult children, and one each for Jamaican family members, including Adam.

The US family would receive 42% of shares, while Adam would receive only 16.67% of shares. Along with this, Butch allegedly wished for the US family to receive veto shares equal in the parent companies of the business and for the parent companies to be the subject of a shareholders’ agreement, giving both the US and Jamaican families “balanced representation on the boards.”

The distribution and arrangement would impact the control of Sandals, the principal asset in the Coral Ridge Trust, one of the two Bahamian trusts.

A trust is a legal entity through which a person gives another party, a trustee, rights to administer assets for a beneficiary.

Butch has delegated all powers over Sandals to an advisory board consisting of Adam and Jaime, limiting Cromwell’s role in the hotel company.

As the enforcer of the trustee, Adam has the authority to appoint and remove directors, succeeding his father in this role.

The Bahamas Court of Appeal recently published a judgment it delivered in May 2023, revealing details regarding the potential change of ownership at Sandals.

In September 2021, Cheryl filed a lawsuit to remove Cromwell Trust Company, alleging conflicts of interest and a potential failure to comply with Butch’s wishes.

The trustee requested that Cheryl’s claim be dealt with in private and the documents sealed, citing the publication of “sensitive information,” but Cheryl withdrew initial support for the order.

In May 2022, the Supreme Court ruled against the privacy request, citing the open justice principle and calling the arguments “extremely unconvincing.”

Adam, Jaime, and Brian appealed to the Court of Appeal, which also ruled against them.

They then approached the Privy Council, the Bahamas’ final court, which dismissed an application to appeal in November. This cleared the way for the publication of the court documents.

The Court of Appeal’s judgment contains specific details of the family dispute over Butch’s estate, who passed away on January 4, 2021. On February 1, previous Supreme Court rulings in the case were published on the court’s website.

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

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

However, the court ruled that Cheryl’s claim against Cromwell did not fall within the scope of the clause and would not disqualify her from being a beneficiary.

Additionally, the court stated that the advisory board’s authority to manage Sandals would not be affected.

The Bahamas Supreme Court judgment revealed that Butch Stewart had left detailed instructions on how the trusts should be managed after his death, including ending them promptly.

The Court of Appeal criticized the judge’s reference to “detailed instructions,” stating that the trusts were entirely discretionary.

The original beneficiaries of the trusts were Butch Stewart, Adam, Jaime, and Bobby, as well as their future children, with Bobby being removed in 2003.

Later, Cheryl and her three children with Butch, as well as Brian, were added. Cheryl is relying on a memorandum Butch signed the day before he died, which outlines how the trusts’ assets will be distributed.

Adam disputes his father’s alleged wishes, including the memorandum, which he claims was prepared with Cheryl’s involvement just one day before Butch’s death.

Adam argued that with his father’s passing, the plan outlined by Patterson cannot be fully implemented and that it would harm the business and the value of Sandals. According to Adam, his father created the advisory board to ensure that Sandals would continue to be run by a member of the family after his death, and that member should be Adam.

Adam, who became Sandals CEO in 2006, is confident that he is the right person to succeed his father in running the family business.

“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.

Adam contended that the US family’s inclusion into the trust in 2018 did not imply that Butch intended for them to be beneficiaries at the same level as Jaime, Bobby, and himself.

He strongly believed that the plaintiff’s claim was exactly what his father wanted to prevent with the ‘no contest’ clause.

However, Cheryl’s lawyer argued that Butch introduced the clause because he was worried that Adam and Jaime would be dissatisfied with their share of 100% being reduced, a matter that the court will determine during the trial.

Court documents also revealed that the parties had been discussing the sale of the Sandals Group’s promised 42% stake to the US family.