The Tribune

By RASHAD ROLLE

Tribune Staff Reporter

rrolle@tribunemedia.net

A DELAWARE judge has approved Baha Mar’s request to begin tapping into $80m in financing to keep the resort on track for opening while it undergoes Chapter 11 bankruptcy proceedings.

This financing is, among other things, essential to the resort’s ability to continue providing key services at its Melia Nassau Beach property.

Judge Kevin Carey of the US Bankruptcy Court in Delaware, US also signed off yesterday on Baha Mar’s motions to pay “$4.5m to employees for wages and benefits” and to refund “customer payments like deposits on condominiums and vacations,” according to the Wall Street Journal.

The judge is expected to hold a hearing on July 20 to review a pending request to pay employee bonuses.

Mr Izmirlian said in a press statement: “Our goal is to complete construction and successfully open Baha Mar as a world-class destination resort that will attract guests from across the globe and serve as a key economic spark plug in The Bahamas.”

“The Chapter 11 process provides us the best path to position us to achieve this goal.”

The statement said Baha Mar’s approved financing allows it to pay “ordinary course suppliers and vendors for any post-petition claims, and the operation of certain customer loyalty and other programmes.”

Baha Mar’s $2.4 billion lender, the China Export-Import Bank and its contractor, China Construction America (CCA), did not object to the financing.

The approved debtor-in-possession (DIP) financing arranged by Baha Mar developer Sarkis Izmirlian includes $30 million that is expected to be used over the next 30 days, ahead of the next court hearing.

Debtor-in-possession financing is a special form of financing given to companies in distress, such as those experiencing restructuring under bankruptcy law.

According to documents filed in the Delaware Bankruptcy Court, the Bahamas Investment Authority (BIA) and Central Bank of the Bahamas were required to approve the DIP financing facility.

As previously reported by Tribune Business, Baha Mar is “projected to run out of cash” by Friday. Its desire for immediate access to $30 million out of the $80 million financing facility reflects its need to keep business running smoothly at the Melia Nassau Beach property.

Among the “critical vendors” to Melia that Baha Mar must pay are its laundry services supplier, fuel supplier, major drink distributors and specialty restaurants that needed to be fully stocked in order to take care of guests.

In court documents seen by Tribune Business, Baha Mar said it would be “catastrophic” if it failed to pay its unnamed laundry service provider the $1 million owed to it, which it said would likely force the provider out of business.

Baha Mar filed for bankruptcy on Monday, blaming its contractor, China Construction America, for the construction delays that caused it to miss previous opening deadlines. It also took legal action against CCA’s parent company China State Construction Engineering Company on Tuesday.

On Monday, the resort sent employees home and told them to no longer physically report to work. The mega-resort has pledged to pay salaries and benefits as it awaits court hearings on its bankruptcy claim.

Baha Mar is responsible for 12 per cent of this country’s gross domestic product.