The Chapter 11 bankruptcy filing in late June by the developer of a nearly complete, $3.5-billion "mega-resort" project in the Bahamas caused considerable uncertainty for all parties connected to the project—including thousands of hotel workers—along with a nasty legal skirmish. Now, with a federal judge having mostly dismissed Baha Mar's legal attempt for a bankruptcy guided by U.S. laws, in favor of one led by the Bahamian government, uncertainty surrounding the situation may only be increasing.
As ENR previously reported, the project developer, Baha Mar Ltd. and its subsidiaries, filed for Chapter 11 bankruptcy protection on June 29 in U.S. Bankruptcy Court in Delaware. At that time, the developer blamed the situation on the contractor, China Construction America Bahamas. And about a week, later, CCA Bahamas fired back, asserting the bankruptcy filing was instead "the direct result of [the developer's] failure to secure adequate financing and its mismanagement of the design of the Baha Mar resort project."
The state-owned contractor—backed by the Export-Import Bank of China—and the Bahamian government then fought the U.S. bankruptcy filing by Baha Mar, which provoked a nasty, and unusually public, back-and-forth by CCA Bahamas and the developer. And on Sept. 15, the contractor and Bahamian government won that battle, when U.S. Bankruptcy Judge Kevin J. Carey dismissed 14 of the 15 related chapter 11 filings.
Baha Mar issued a statement, noting that it was "disappointed" in the ruling, and that it "will explore its alternatives." The developer also added:
In its ruling, the Court made clear that the Chapter 11 process “with all stakeholders participating, under these circumstances, would be an ideal vehicle for the restructuring of this family of related companies with the ultimate goal of finishing a project said to be 97% complete and, upon its exit from Chapter 11, to be in sound financial footing, with appropriate treatment of creditors.”
The Court also made the point: “If I were convinced that denying the Dismissal Motions would have the effect desired by the Debtors—bringing CCA, CEXIM and the government of the Bahamas back to the bargaining table, I might consider denying the Dismissal Motions. But the evidence does not reflect this and I am not convinced this will happen in short order.”
The contractor responded: "CCA Bahamas welcomes Judge Kevin Carey’s ruling to dismiss the vast majority of Baha Mar Ltd.’s Chapter 11 cases and supports the Court’s decision that issues concerning the Baha Mar Resort Project are best resolved within The Bahamas. This decision protects the interests of all principal stakeholders and provides greatest certainty to the future of the Baha Mar Resort."
The company added: "CCA Bahamas remains committed to working with the provisional liquidators appointed by the Bahamian Supreme Court as this process moves forward. We possess unique expertise and understanding of the project, and we stand ready, willing and able to re-mobilize the appropriate resources to complete the Baha Mar resort as soon as possible.”
Those last comments could reflect the contractor's recognition of the possibility that the Bahamian bankruptcy's liquidators could opt to finish the project entirely with local firms, and without CCA, as Baha Mar has suggested previously.
While the U.S. bankruptcy proceeding has been largely cancelled, readers can view a list of the nearly 200 claims that have been filed here. The claims total up well into the tens of millions of dollars, with the current largest single claim belonging to AON Reed Stenhouse Inc., with a total of more than $9.1 million.