By AVA TURNQUEST
Tribune Chief Reporter
aturnquest@tribunemedia.net
BAHA Mar’s proposed bankruptcy plan calls for the rejection of its construction contract and all other claims with China Construction America (CCA), and its parent company China State Construction Engineering Corporation (CSCEC), in a bid to restructure the stalled mega-resort.
The resort insisted that Bahamian creditors would be paid in the “ordinary course of business” once the Chapter 11 reorganisation plan filed yesterday in a Delaware court by the resort and its 14 affiliates – referred to as debtors – was implemented.
According to court documents, Baha Mar would negotiate directly with CCA’s sub-contractors to reconcile claims if CCA failed to remit payment, but added that any distributions on account of the claims would be made at the sole discretion of the debtors.
Any distribution made to sub-contractors would reduce CCA’s claims against the debtors, according to court documents.
The plan was described as the best available alternative to allow for the quick resumption and completion of the project’s construction.
According to the court documents, it takes into consideration the value of the $3.5bn Cable Beach project as a long-term business that was tied to the economic welfare of the country.
“Once completed,” the plan read, “the project is projected to generate nearly 5,000 new jobs and have an annual payroll in excess of $130 million, representing 12 per cent of the GDP of the Bahamas.
“Most notably, the plan does not impair the legal or equitable rights of Bahamian creditors or the government of the Bahamas, whose claims will simply ‘ride through’ the Chapter 11 cases.”
It continued: “The debtors submit that timely confirmation of the plan is unequivocally in the best interests of their creditors and estates.”
In a statement released yesterday, Baha Mar explained why it feels the plan is the best move for the resort.
“The filing of the Chapter 11 plan is an important step in Baha Mar’s restructuring efforts,” the statement said. “The plan presents a viable framework for Baha Mar’s emergence from Chapter 11 and the expeditious resumption and completion of the construction of Baha Mar.
“Baha Mar’s priority is to complete the resort’s construction properly and open successfully as soon as possible. The plan is structured to enable Baha Mar to achieve this objective.”
On June 29, Baha Mar and 14 of its affiliated companies filed for bankruptcy in a Delaware court, blaming the resort’s contractor, CCA, for the construction delays that caused it to miss previous opening deadlines.
The resort also took legal action against CCA’s parent company China State Construction Engineering Corporation in the English High Court.
This is not the first time that the resort has sought to sever ties with its general contractor. Back in July, Baha Mar CEO Sarkis Izmirlian made a $200m proposal to its Chinese lender to drop CCA and use Bahamian contractors to complete the project.
Mr Izmirlian accused CCA of backtracking on negotiations and holding the resort “hostage”, and insisted that the only way to successfully complete the $3.5bn resort was to end discussions with the general contractor and enter into a 50-50 agreement with the Export Import Bank of China to fund the $400m needed to finish construction and open the resort.
Baha Mar allegedly owes the government $58.845 million in unpaid taxes, fees and utility bills, including monies due to the National Insurance Board (NIB) and work permit fees, according to the government’s winding up petition against the property.
The greatest sum is owed to the Bahamas Electricity Corporation - some $26.33 million.
The Supreme Court is expected to make a decision on the government’s winding up petition on September 4.
Comments
TruePeople 8 years, 8 months ago
"This is not the first time that the resort has sought to sever ties with its general contractor. Back in July, Baha Mar CEO Sarkis Izmirlian made a $200m proposal to its Chinese lender to drop CCA and use Bahamian contractors to complete the project."
To all who say Izzy is an enemy of the Bahamas
marrcus 8 years, 8 months ago
Seems like Baha Mar (and companies) have been professional all the way. Its PGC and the Chinese that are getting dirty under the sheets. When will we see all the service contracts for swimming pools, and preferential retail locations? Will we ever see the "full picture?" I cannot recall the Bahamas being shamed so badly. Very disheartening.
Economist 8 years, 8 months ago
Well the CCA is being investigated by the FBI, so some say and maybe it is all because of the Foreign Corrupt Practices Act in the US.
truetruebahamian 8 years, 8 months ago
The Chinese have been notoriously unprofessional in their building practices bordering upon criminal. They should have been sent packing long ago - in fact with their terrible track record they should never have been allowed to begin. This government allowed this to happen as the result of greed and deceit.
papasmurff36 8 years, 8 months ago
Why would the government allow this same construction company to build another hotel downtown when they couldn't build Bahamar properly? It is clear that this government are in partnership with CCA.
Bahamian_in_London 8 years, 8 months ago
Lets see Christie argue against this proposal. Of course, he won't say anything - he will just continue with the winding up order and hope for the best.
I can't see how Chapter 11 could be dismissed as CCA desire with this proposed plan in place.
MonkeeDoo 8 years, 8 months ago
marrcus: I understand that the pool and waterway deal was done in the USA. Nevertheless, Osprey may have to tell what happened as they are owed 50 million and facing bankruptcy themselves. My guess is that they were sub-contracted by a US firm which had the main contract. Perhaps their Bahamas Banker,which must have advanced them credit facilities to build all of this stuff, is holding something from the main contractor. Shakespeare said"The Truth Will Out". I guess we just have to wait.
Wideawake 8 years, 8 months ago
Baha Mar and CCA's business relationship was never "a match made In heaven", but rather a "shotgun marriage" insisted upon by CIMEXB. Mr. Izmirlian needed the financing, CIMEXB had the money to lend; BUT, CIMEXB insisted that CCA/CSCEC get the contract to build the resort!!
Of course Baha Mar checked out the track record of CCA. The information is widely available on the internet, and anyone can easily learn about their history of corrupt practices regarding other overseas projects they have participated in, and also the fact that they were banned by The World Bank from doing any projects that the Bank was financing, from 2009-2015.
So it really isn't surprising that the "chickens eventually came home to roost" and the uneasy relationship between Baha Mar and CCA became savaged by irreconcilable differences. Bearing in mind the reputation of CCA, it is perhaps amazing, that CCA completed 97% of the project before it finally ground to a halt!!
I wonder what Cabinet members thought when they first learnt that CCA was the proposed contractor!!!!
Did they say, "Oh no, dear me, Sarkis is going to use a contractor known to be corrupt on his $3.5 billion project, this we cannot allow, in case they try their well known bribery tricks in The Bahamas!!?
Or did they start to jump up and down and say "Hell yes!!! Gravy train coming to town!! Yippee! And thank you, thank you, Mr. Izmirlian !!!"?
LVJK 8 years, 8 months ago
Bahamians better hope that the Izmirlians are not taken out of this project in favor of the communist Chinese government and the soon to be communist government of The Bahamas. Bahamians, wake up! Call for a new government and get rid of the Christie administration.
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