The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Sarkis Izmirlian yesterday blasted Baha Mar’s contractor as “a company fraudulently managed by bad actors” while slamming the bankruptcy protection filing by its US arm as a bid to “evade responsibility for its actions”.

The Cable Beach mega resort’s original developer, in a statement responding to CCA Construction Inc’s Chapter 11 move, accused the Chinese state-owned contractor of “hiding” behind US bankruptcy protection law to avoid having to pay him $1.642bn in damages and post a $1.9bn bond to pursue overturning that award via the New York State Supreme Court’s appeals division.

Reiterating that he secured a near-total win in his original fraud and breach of contract claim, the Lyford Cay resident voiced optimism that both himself and his BML Properties vehicle will prevail in their legal battles with CCA Construction Inc and its Bahamian affiliates before both the New York Supreme and now-New Jersey federal bankruptcy courts.

Attacking the Chinese contractor’s stealth Sunday move to file for Chapter 11 protection for its US arm, Mr Izmirlian blasted: “This is just another example of CCA, and its multi-billion dollar parent company China State Construction Engineering Corporation (CSCEC), attempting to evade responsibility for its actions by hiding behind a Chapter 11 proceeding.

“I am confident that both the bankruptcy judge and the New York appellate court will see CCA for what it is: A company fraudulently managed by bad actors. We will take every step necessary to enforce our rights against CCA and all those who orchestrated CCA’s frauds, including its parent, CSCEC.”

Baha Mar’s original developer reiterated that New York State Supreme Court judge, Andrew Borrok, in a 74-page verdict awarded him and his family the full value of their original $845m equity investment in the mega resort project plus more than a decade’s worth of pre-judgment interest after finding CCA and its affiliates perpetrated “an absolute sham and shakedown” by providing “phony” completion dates

Unveiling his findings just over two months after a 14-day trial, the judge found that Mr Izmirlian’s fraud claim against CCA was “established beyond doubt” as the contractor “knowingly and falsely” promised it would meet the revised March 27, 2015, opening date for Baha Mar while concealing from the developer this was unlikely to be achieved.

Judge Borrok’s verdict identified six different contractual breaches by CCA, or violations of the investors’ agreement that governed the relationship between the two sides, while also citing what he described as “at least four instances of fraud”.

Mr Izmirlian, pointing out that CCA’s parent, CSCEC, is both majority owned by the Chinese government as well as being a public company through its listing on the Shanghai stock exchange, repeatedly recalled Judge Borrok’s findings that the testimony provided by the Chinese contractor’s witnesses “was not credible and was inconsistent” with the documentary evidence provided at the trial.

However, CCA and its affiliates have escalated their efforts to counter Mr Izmirlian’s releases by issuing a three-page document designed to refute “ten of the top false claims” they say are being spread by Baha Mar’s original developer.

Denying that CCA Bahamas, the entity said to be Baha Mar’s “construction manager”, deliberately delayed or held up the project’s completion, CCA asserted: “From the outset, the project was behind schedule because Baha Mar breached its obligations under the contract to timely provide design drawings to CCA Bahamas, which prevented CCA Bahamas from progressing construction as planned.

“In June 2012, Baha Mar fired Baha Mar’s architect, which required much of the design work to be redone, and delayed the delivery of the design by more than two years.” These arguments are much the same as those previously dismissed by Judge Borrok, but the Chinese state-owned contractor is alleging CCA Bahamas and CSCEC Bahamas, the other two defendants in Mr Izmirlian’s case, are not CCA Construction affiliates.

A complex corporate chart, filed with the New Jersey bankruptcy court as part of Mr Wei’s affidavit, purports to show CCA Construction Inc as a separate entity with no ties to the Bahamian companies or operations. However, both it and the Bahamian entities come under CSCEC Holding Company, whose ultimate parent is China State Construction Engineering Corp.

Instead, CCA’s Bahamian entities are shown as owned by CCA International Group, a Delaware-incorporated entity. CCA Bahamas, which comes directly under this company, is shown as the immediate owner for Neworld One Bay Street and Strategic Property Holding Ltd, which are the holding entities for The Pointe complex and British Colonial resort in downtown Nassau, respectively.

However, Judge Borrok in his verdict ruled that “piercing the corporate veil” of CCA was correct as “there was substantial overlap between the officers and directors” of CCA Bahamas, CSCEC Bahamas and CCA Construction Inc - contrary to CCA’s assertions. He found that the three entities were used interchangeably, as executives “slipped from entity to entity as it suited their needs”.

“The defendants consistently held themselves out as working on behalf of CCA Inc or otherwise conflated and blurred beyond independent recognition their purportedly separate corporate existences,” Judge Borrok added. “Although CCA Bahamas was the project manager and general contractor for the project, the defendants often used CCA Inc letterhead, e-mails and signatures for project-related documents and communications.”

Still, CCA Construction Inc and its Bahamian affiliates are not abandoning their argument that it was Mr Izmirlian and his management team, not the contractor, who were responsible for the missed March 27, 2015, target opening that plunged the Baha Mar project into financial crisis, its own Chapter 11 bankruptcy proceedings and the original developer’s ouster.

Yan Wei, CCA Construction Inc’s chairman and chief executive, in a December 22, 2024, affidavit in support of the US arm’s Chapter 11 filing, asserted: “By 2014, the project was significantly delayed because of BML Properties’ mismanagement of Baha Mar, which fired its architect years into construction and delivered design drawings over two years behind schedule.

“And Baha Mar issued hundreds of change orders through the life of the project, further compounding delays. By the summer of 2014, all parties were projecting an opening date in the summer of 2015 and, by the fall of 2014, Baha Mar owed tens of millions in unpaid construction invoices to CCA Bahamas.”

Referring to the critical November 2014 meeting in Beijing, which was supposed to resolve Baha Mar and CCA’s differences and set out a road map for the mega resort’s completion, Mr Wei added: “Non-contractual minutes of the meeting reflect that Baha Mar promised to pay CCA Bahamas $54m as a settlement of CCA Bahamas’ claim to approximately $98m in unpaid construction invoices.

“CCA Bahamas stated that it would add Chinese workers to the project and use its best efforts to achieve a limited partial opening on March 27, 2015, on the condition that Baha Mar ‘“provide necessary assistance and co-operation’.” The $54m referenced by Mr Wei is the sum that Judge Borrok ruled was instead diverted, without Baha Mar’s knowledge, to finance the British Colonial’s acquisition.

Nevertheless, Mr Wei continued: “CCA Bahamas took extraordinary measures to achieve the March 27 opening date. It brought in hundreds of workers from China, hired even more in The Bahamas, and worked diligently towards the March 27, 2015 date.

“Far from providing necessary assistance and co-operation, Baha Mar, by its president’s [Thomas Dunlap] own admission, continued to make design changes and ‘bombed’ its own deliverables, including failing to get a certificate of suitability to activate the licence to operate the casino at the casino hotel - the only hotel they were attempting to open at that time.

“The project did not open on March 27, 2015, although construction was - by Baha Mar’s own admission - approximately 97 percent complete at that time. After March 27, CCA Bahamas continued to move the construction forward even after Baha Mar stopped paying,” the CCA Construction Inc chief added.

“Instead of collaborating with CCA Bahamas and its lender to complete the resort, BML Properties hatched a secret plot to place Baha Mar into a Chapter 11 bankruptcy. BML Properties sought to strip CSCEC Bahamas of its [$150m] minority investment and deprive CCA Bahamas of payment, using the debtor-in-possession lender on the project, which was another entity owned by Sarkis Izmirlian, to gain total control.

“It was undisputed at trial that BML Properties placed Baha Mar in bankruptcy without first obtaining the required consent of CSCEC Bahamas, the minority investor, as contractually required. BML Properties even plotted to exclude, and successfully excluded, CSCEC Bahamas’ appointed director [Tiger Wu] from the boardroom when the decision to file Chapter 11 was voted on....

“This decision to commence an improper Chapter 11 case brought the project to a crashing halt with the erection of a chain link fence around the project, which precluded CCA Bahamas and Baha Mar from completing the project.”