The Tribune

By SANCHESKA BROWN

Tribune Staff Reporter

sbrown@tribunemedia.net

BAHA Mar Limited, the parent company behind the stalled $3.5 billion mega-resort in Cable Beach, is suing China State Construction Engineering Corporation Ltd, the resort’s largest creditor, one day after filing for Chapter 11 bankruptcy in the United States.

The claim against CSCEC seeks financial remedies for alleged liabilities in respect to guarantee and performance obligations related to the construction of the project.

Baha Mar Ltd has filed its claim in the English High Court against China State Construction, the parent company of China Construction America (CCA), the developer said in a statement on Tuesday.

The claim stems from what Baha Mar Ltd said were repeated delays that have caused the resort to miss its opening deadlines.

In the claim, Baha Mar Ltd is represented by a team from Kobre & Kim LLP in the United Kingdom led by Andrew Stafford, QC.

Baha Mar CEO Sarkis Izmirlian has repeatedly blamed CCA for continued delays in the resort’s opening.

In a statement on Monday, explaining why the resort thought it was best to file for Chapter 11 bankruptcy, Mr Izmirlian once again blamed the resort’s financial troubles on “repeated delays by the general contractor”.

“The general contractor repeatedly has missed construction deadlines. This has caused both sizeable delay costs and forced the resort to postpone its opening. Unable to open, the resort has been left without a sufficient source of revenue to continue our existing business,” Mr Izmirlian said.

“In fact, after the general contractor made a guarantee to us in November 2014, and then again in January 2015, that Baha Mar would be able to open in its entirety on March 27, 2015, we undertook all preparations necessary for this promised opening date, including significant hiring and training of nearly 2,000 employees and purchasing of goods and services. Indeed, even when we subsequently found out that the March 27 deadline was not feasible because the general contractor had still not completed construction, rather than simply downsizing, we maintained our employment levels in anticipation of a revised opening date, utilising our financial resources to pay employees to continue their work at the project and participate in volunteer activities around the island for the benefit of the country.”

Baha Mar owes China State Construction $72.6 million in construction costs, according to court documents filed in support of the bankruptcy filing.

Baha Mar Ltd filed for Chapter 11 bankruptcy in the US Bankruptcy Court in Delaware, and will file an application in the Supreme Court of the Bahamas seeking approval of the US court orders.

Mr Izmirlian said Baha Mar will continue for a period to operate and fund payroll. The statement from the resort stressed that Chapter 11 is not a liquidation process and the resort has “asked the court for approval to continue paying the salaries and benefits of its employees.”

However, if a consensual resolution cannot be made in the next few weeks, Baha Mar “will have to make some extremely difficult decisions that would include workforce reduction.”

The Meliá Nassau Beach will continue to operate but the convention centre and golf course will not be open during this process.

Baha Mar was initially expected to open in December 2014.