A subsidiary of China Construction America (CCA), as well as the Bahamian government, are taking separate steps to prevent the developer of a stalled, nearly complete resort project from attaining protection from creditors via bankruptcy.
The latest courtroom maneuvers are unfolding as the contractor and developer participate, ironically, in negotiations with the Export-Import Bank of China—the project’s main financier—aimed at restarting construction of the $3.5-billion Baha Mar project, which is 97% complete.
Lawyers with CCA Bahamas filed a motion July 20 to dismiss the Chapter 11 bankruptcy filing—originally filed by Northshore Mainland Services, a division of Baha Mar Ltd.—in the U.S. Bankruptcy Court’s Delaware district.
The motion for dismissal argues the project “has no connection to the United States.” Beyond the mere fact of the project’s location in Nassau, for instance, the motion states that “the debtors’ affiliates are foreign entities, the debtors’ principal offices are in the Bahamas, and the debtors’ secured lender and general contractor are foreign entities.”
Just days prior, on July 16, the Bahamian government filed a “winding-up petition” with the Bahamian Supreme Court aimed at taking control of Baha Mar’s bankruptcy proceedings.
In a statement, Prime Minister Perry Christie described the island nation’s involuntary winding-up proceedings as similar to Chapter 11, “but with the stark difference that they will be controlled by provisional liquidators,” whose role will be “to expedite the resolution of the matter and to prepare a plan for the restructuring of Baha Mar that will result in the earliest possible completion and opening of the project."
The developer responded July 17, calling the winding-up filing “unnecessary and reactionary,” while also stating the action “puts Baha Mar's staff and assets at severe risk and significantly jeopardizes the future of the resort."
When Baha Mar Ltd. and its subsidiaries filed for bankruptcy protection June 29, the group blamed the contractor for the project’s construction delays and financing issues. The contractor, meanwhile, laid blame at the developer’s “failure to secure adequate financing." Additionally, the contractor asserted it had not been paid for its work since February and is owed approximately $72 million.
In his statement, Christie asserted it had been revealed that the developer not only lacked sufficient funding to finish construction, but also needed assistance to operate the massive resort.
According to Christie and the Bahamas Tribune, the China Ex-Im Bank had put forward a plan during the China talks to provide financing to complete the project, including $100 million in operating capital to the developer. One reported sticking point was the requirement that Baha Mar Ltd. CEO Sarkis Izmirlian agree to a personal guarantee.
Representatives of Baha Mar Ltd. have stated that discussions between the parties are ongoing.
Baha Mar hired CCA as general contractor after it secured project financing from the China Ex-Im Bank, which provided the developer with a $2.45-billion secured debt facility.
Construction, which began in early 2011, was originally scheduled to conclude by late 2014.
As of July 21, the claims filed in relation to the Baha Mar bankruptcy case include Jaros, Baum & Bolles (mechanical and electrical consultant), $1,802,117; Acomb Ostendorf & Associates LLC (hospitality consultant), $321,052; T.C. Millwork, $291,754; Architectural Brass, $258,510; Pureti Bahamas Ltd., $132,456; Advanced Gaming Associates, $126,342; DHP Associates (cost estimating), $56,995; All Wood Fine Interiors Ltd., $38,545; KPRD Fire Protection Engineering, $38,435; O Design Services, $35,096; Gaming Laboratories International, $25,515; TAI Architecture & Design, $23,909; and Harris Civil Engineers LLC, $10,025.
