NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
Baha Mar’s original developer yesterday pledged hundreds of Bahamian jobs will be protected despite his bid to wind-up two major Nassau hotels.
Sarkis Izmirlian, in a statement, reassured staff at downtown Nassau’s British Colonial and Margaritaville Beach Resort properties that their livelihoods will be safe even if he succeeds in persuading the Bahamian Supreme Court to appoint liquidators for their parent company that is presently owned by the Baha Mar project’s Chinese contractor.
Legal documents obtained by Tribune Business confirm that Mr Izmirlian and his BML Properties vehicle are petitioning for KPMG to be approved as court-appointed liquidators for the entity that owns the two Nassau resorts, CCA (Bahamas). And, if his bid succeeds, the accounting firm will also take control of another China Construction America (CCA) affiliate, CSCEC (Bahamas).
The original Baha Mar developer has moved against both companies in a bid to seize and secure control of two Bahamian hotels that represent the most valuable assets owned by the three CCA subsidiaries that have been ordered by the New York State Supreme Court to pay him $1.642bn in damages - a sum that is increasing daily.
The Chinese state-owned contractor has instead elected to appeal that verdict, while placing the last of its three defendant affiliates, New Jersey-based CCA Construction Inc, into Chapter 11 bankruptcy protection in the US. But, while that has protected CCA Construction Inc and its assets from any attempt by Mr Izmirlian to enforce his damages award against it, the same protections are not available to the Bahamas subsidiaries.
And Baha Mar’s original developer has taken full advantage by targeting Bahamian resort assets said to have been valued at a combined $355.1m - less than one-fifth of his New York damages award. However, he emphasised that his actions will not impact the hundreds of employees working at the British Colonial and Margaritaville Beach Resort regardless of the outcome.
“We are seeking the protection of court-appointed guardians [KPMG] to ensure the continued stable operation of the hotels and preserve Bahamian jobs,” said Mr Izmirlian. Neither CCA nor the Government responded to Tribune Business calls and messages seeking comment before press time last night, although it remains to be seen whether the Davis administration can - or will - intervene in the case.
Whitney Thier, executive vice-president, general counsel and secretary for BML Properties, the corporate vehicle owned by Mr Izmirlian, cited the alleged insolvency of both CCA (Bahamas) and CSCEC (Bahamas) as the basis for the winding-up petition’s filing given previous admissions that they lacked the cash and other assets to settle the $1.642bn New York judgment.
“To-date, the company has failed and/or refused to pay or satisfy any part of the New York judgment debt which remains fully enforceable as against it,” Ms Thier said of CCA (Bahamas), “or to make any offer to the petitioner to secure or compound the same.
“In the premises, the company is insolvent within the meaning if section 186 (c) of the Companies Act chapter 308 as it is unable to pay the New York judgment debt that is overdue and/or the value of the New York judgment debt exceeds the company’s assets. Accordingly, the company should be wound-up by the honourable court.
“The company has stated that it is unable to pay the New York judgment, a debt now due, and that its value exceeds the value of the company’s assets.” CCA (Bahamas), according to a corporate chart released by the contractor itself, is the immediate parent for Neworld One Bay Street Ltd and Strategic Property Holding Ltd, which hold the British Colonial and Margaritaville Beach Resort respectively.
Pointing out that Mr Izmirlian’s damages became payable as of October 31, 2024, and that the New York appeals court lifted the temporary stay that previously barred its enforcement, Ms Thier cited numerous statements by CCA executives, its US attorneys and bond broker that showed the hotels’ immediate parent is insolvent.
As an example, Genguo Ju, CCA (Bahamas) executive vice-president, admitted in a November 1, 2024, affidavit that the combined value of the two Bahamian resorts is “a mere fraction” of the damages award. And, on the same day, Mark Goodman, one of CCA’s US attorneys, described the contractor’s affiliates as “largely illiquid entities” and affirmed enforcement of the judgment would make them insolvent.
Neil Pedersen, a bond agent, also asserted it was impossible to raise the $1.9bn security required for CCA to pursue its New York appeal against Mr Izmirlian’s award given “that there is a billion dollar liability with no ability to satisfy it.”
“In the light of the insolvency admissions, it is manifest that the company is unable to pay the New York judgment debt and also that the value of its liabilities exceeds its assets,” Ms Thier argued. “By reason of the foregoing, the company is both cash flow insolvent and balance sheet insolvent within both limbs of the meaning of ‘insolvent’ provided on section 187 (a) and (b) of the Companies Act.
“In the circumstances, it is just and equitable that the company should be wound-up.” Mr Izmirlian and BML Properties are thus petitioning the Supreme Court to appoint Simon Townend, KPMG (Bahamas) country managing partner, and fellow accountants, Jean K. Green-Thompson and James Neill, the latter from KPMG Ireland, as liquidators for both CCA (Bahamas) and CSCEC (Bahamas).
They would take control of both companies’ assets and operations, including the two Nassau resorts, if appointed. Mr Izmirlian and BML Properties said yesterday they are seeking an “orderly liquidation” of both companies to help partially recover some of the damages awarded by the New York courts. This signals he would likely seek a buyer for both the British Colonial and Margaritaville properties.
CSCEC Bahamas, the CSCEC standing for China State Construction Engineering Company, which is CCA’s Beijing-based parent, previously held $150m worth of preference shares in the original Baha Mar project prior to its eventual liquidation some eight years ago.
Many observers will likely appreciate the irony that the dispute, which ultimately saw Mr Izmirlian ousted as Baha Mar’s developer, has now come full circle. Almost nine years after the last Christie administration initiated winding-up petitions that saw the original Baha Mar project and its affiliates placed in provisional liquidation, then wound-up, the same process is now being used against CCA’s Bahamian interests.
Mr Izmirlian’s winding-up move will also disrupt CCA’s ability to prosecute its New York appeal against his damages award. If the Supreme Court grants the winding-up petition, the actual standing or ability of the two Bahamian entities to participate in the proceedings alongside US-based CCA Construction Inc could be in jeopardy.
And it would be the KPMG liquidators, not CCA, taking all relevant decisions regarding the two Bahamian entities’ participation as they - instead of the contractor - will be in management and operational control. Baha Mar’s original developer has thus countered the impact of CCA Construction Inc’s Chapter 11 bankruptcy protection move.
CCA previously described the British Colonial and Margaritaville Beach Resort as the “only two significant assets” owned by itself and its affiliates. Genguo Ju, CCA (Bahamas) executive vice-president, asserted in an affidavit that the shares giving it ownership of both resorts were valued at $146m in the company’s most recent audited financial statements. And an appraisal conducted earlier this year had priced the combined real estate worth of the two properties at between $232.7m and $355.1m.
“CCA (Bahamas), a Bahamian company, is primarily a holding company whose only material assets are its interests in two Bahamian subsidiaries. These two subsidiaries together own two hotels in Nassau, Bahamas: The British Colonial Hotel & Office Complex and the Margaritaville Beach Resort complex,” Mr Ju said.
“Earlier this year, CCA (Bahamas) obtained appraisals of the two hotels from Cushman & Wakefield and Jones Lang LaSalle (JLL). Cushman and JLL appraised the collective value of the hotels as between $232.7m and $355.1m. CCA (Bahamas) would be willing to provide those valuation reports to the court [privately] and under seal, and to make them available to plaintiff subject to an appropriate confidentiality order.”
Reasserting CCA’s position that surety financiers would not accept the two Nassau resorts as collateral for the proposed $1.9bn New York appeal security, Mr Ju added: “Nonetheless, independent of any bond, CCA Bahamas is willing to pledge its shares of its two subsidiaries as security against the judgment.
“Those shares were carried on CCA Bahamas’ books in its most recent audited financial statement at approximately $146m. CCA Bahamas would be willing to provide that statement to the court in [private] or under seal, and to make it available to plaintiff subject to an appropriate confidentiality order. CCA Bahamas intends to continue to operate the hotels in the regular course during the pendency of this appeal.”
Comments
TalRussell 1 week, 1 day ago
ME got to thinkin' in Mandarin, the official business and media language used. -- Why the China State Construction Engineering Company....has good reason to be more than just a lil bit bothered over the wind speed behind Sarkis Izmirlian's attempts at turning their two prized Nassau resorts properties into BML Properties Ltd...After evidence showed that rather than fulfilling its promise to have the Baha Mar Resort ready for paying guests... millions of dollars were covertly used to buy the British Colonial Hilton in Nassau. -- Yes?
ExposedU2C 1 week ago
Simon Townend is perhaps the most competent insolvency practitioner at a Big-4 accounting firm in The Bahamas today.
Twocent 5 days, 21 hours ago
And this is why The Bahamas does not attract sound, solid, ethical, transparent, investors…it stabs those in the back while encouraging ponzi resort schemes which never materialize because government got their piece of the investor cake from that which those “business entrepreneurs” swindled !
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