On Wednesday a Bahamian judge denied luxury resort, Baha Mar Ltd.’s request for recognition of its U.S. bankruptcy filing at the urging of the island nation’s government. The Supreme Court’s decision this week sets the stage for a provisional liquidator to be appointed by the Court on July 31, 2015, should no agreement be reached between the parties. The liquidator will be a third party, independent organization.
The decision by Bahamas Supreme Court Justice, Ian Winder was just the latest obstacle in the nearly completed project that was originally slated to open in 2014, and has been plagued by delays and associated financial woes.
The petition for bankruptcy relief was filed on June 29th with a federal court in Delaware for protection under Chapter 11 U.S Bankruptcy Code due to the financial consequences of repeated delays. Two completion deadlines were missed by the local developer, Sarkis Izmirlian, whose family has invested more than $900 million in the project.
U.S. Court filings show the developer accused China Construction America (CCA), a unit of China State Construction Engineering Corp Ltd, of cutting power to the work site the day after the bankruptcy filing, inflating expenses and trying to steal documents stuffed in suitcases. CCA has denied the allegations, claiming the developer is trying to deflect attention from its own mismanagement of the troubled project.
A successful Chapter 11 U.S. bankruptcy filing would have protected the company’s assets and prevented creditors from taking action against Baha Mar Ltd in the Bahamas. CCA has requested dismissal of the Chapter 11 from U.S. Bankruptcy Court in Wilmington, Delaware.
Baha Mar does not believe the ruling to be in the best interests of their 2,500 plus current employees, or that it assures the necessary protection of Baha Mar’s assets.
According to Bahamian Prime Minister Perry Christie, completion of the project is a matter of national importance. It is said that more than 2,000 employees of the resort are Bahamian nationals. The government wants liquidators for Baha Mar appointed by a local court. When the remaining three percent of the resort is completed, it will have upwards of 2,000 hotel rooms and a casino reminiscent of Las Vegas.
In an economy where the unemployment rate is approximately 12 percent the project is considered vital for the overall Caribbean economy. According to Baha Mar Ltd and the Bahamian government, more than 5,000 people would be employed by the resort, and the contry’s gross domestic product will experience an increase of approximately 12 percent.
Correction: In a previous version of this story we stated that, “completion of the project is a matter of national importance and his [PM Christie’s] government will pursue liquidation proceedings to seize control of Baha Mar,” in a context that may have been construed to mean in relation to the recent court ruling. That assertion has been corrected.