"Baha Mar must open!" In a statement issued July 16, Bahamian Prime Minister Perry Christie used those words, in boldface, to announce that the island nation was taking legal steps to take government control over the $3.5-billion Baha Mar Resort property. The move is the latest development in an 11th-hour legal standoff between the developer, Baha Mar Ltd.—which filed for Chapter 11 bankruptcy protection on June 29—and China Construction America, the contractor, which says it is owed $72 million for unpaid work. According to both parties, the mega-resort project, located in the Cable Beach area of Nassau, is estimated to be 97% complete
In his statement, Prime Minister Christie explains the legal maneuver in detail:
"My Government has taken the decision to seek to bring the Baha Mar development project under the control and supervision of the Bahamian Supreme Court, right here in the Bahamas. Consequently, on the advice of our Bahamian, U.K, and U.S. lawyers, the Attorney General has today filed a winding up petition in the Bahamas Supreme Court against the 14 Bahamian entities that filed for Chapter 11 protection.... These compulsory or involuntary winding-up proceedings are designed to work in very similar terms as a chapter 11 but with the stark difference that they will be controlled by provisional liquidators under the supervision of the Bahamian Courts rather than being controlled by Mr. Izmirlian. These liquidators, if appointed by the court, will be neutral and impartial professionals of the highest quality and of impeccable credentials. Importantly, the role of the liquidators will be to expedite the resolution of the matter and to prepare a plan for the restructuring of Baha Mar, that will result in the earliest possible completion and opening of the project."
Christie explains that the Bahamas is taking this step by characterizing the talks between Baha Mar Ltd., China Construction America and the Export-Import Bank of China as failed. Additionally, the prime minister argues that the bankruptcy filing by Baha Mar Ltd.—led by Sarkis Izmirlian—would leave the development in peril of not being completed, due to the developer's lack of funding to finish and operate the resort.
"If Baha Mar's strategy in the U.S. was allowed to continue, there would not only be a substantial delay in the completion of the project, but there would also be great uncertainty as to whether the developer would ever be in a position to complete the project at all," stated Christie.
According to Christie, and the Bahamas Tribune, during the China talks, the China ExIm Bank had put forward a plan to provide financing to complete the project, including $100 million in operating capital to the developer. One reported sticking point was the requirement that Izmirlian agree to a personal guarantee.
On July 17, Baha Mar Ltd. fired back with its own interesting statement, declaring "The Bahamian Government's decision to seek a winding up of Baha Mar is both unnecessary and reactionary, puts Baha Mar's staff and assets at severe risk, and significantly jeopardizes the future of the resort."
The developer goes on to argue that many of the prime minister's statements were either misleading or incorrect. Significantly, for instance, Baha Mar states that the negotiations, held in China, remain ongoing.
Additionally, Baha Mar says it has not refused to halt its Chapter 11 proceedings, as Christie claims, and instead asserts that it will do just that after the parties come to an agreement over financing, thus implying a deal may be near. "We have agreed to dismiss the case as soon as parties have a mutually-beneficial binding agreement to the benefit of all parties."
The developer concludes: "We urge the Government of The Bahamas not to seize private-party assets and to allow the private parties in what is after all a commercial enterprise to come to an agreement that would allow for the completion and opening of Baha Mar as soon as possible, as the Government has publically and explicitly urged."