By NATARIO McKENZIE
Tribune Business Reporter
ROSEWOOD said yesterday that its brand is being tarnished daily as a result of its ongoing association with the stalled Baha Mar development, saying that it continues to incur costs and expenses for which it is not being compensated.
Rosewood Hotel and Resorts International filed a motion yesterday for relief from the automatic stay granted by a Delaware Court judge in Baha Mar’s bankruptcy proceedings, to allow for the termination of its licence agreements and other agreements with Baha Mar. Rosewood entered a hotel management agreement with Baha Mar in 2011.
“Given the controversy of the Baha Mar project, its failure to open and honour reservations from the public, the litigation and public acrimony between Baha Mar on the one hand, and all of its protagonists - the Government of The Bahamas, CCA and CEXIM - on the other hand, the existence of the DIP financing defaults, and the numerous incurable defaults under the Rosewood Hotel Agreements, Rosewood believes that its brand is being diminished and tarnished each day as a result of its ongoing association with Baha Mar.
“Moreover, each day, Rosewood continues to incur costs and expenses for which it is not being compensated,” the hotel operator said in court documents.
It went on to argue that as a result of its licence agreement with Baha Mar it is “prohibited” from “exploiting the Rosewood marks elsewhere in The Bahamas during the term of the Licence Agreement”.
“Similar radius restrictions on Rosewood’s ability to manage hotels in The Bahamas exist under the Hotel Management Agreement while that agreement is in effect. Suffering such restrictions while Baha Mar is hopelessly in default under the Rosewood Hotel Agreements further diminishes the value of the Rosewood brand and otherwise prejudices Rosewood because, at the same time Rosewood is not profiting from its relationship with Baha Mar as a result of Baha Mar’s failure to perform and other incurable defaults, Rosewood is prohibited from exploiting the Rosewood marks elsewhere in The Bahamas.
“Therefore, Rosewood is now suffering, and will suffer additional irreparable harm if it is not permitted to terminate the Rosewood Hotel Agreements and be relieved of its association with Baha Mar.”
The luxury hotel operator also argued that Baha Mar will not be greatly prejudiced if the court modifies the automatic stay to permit Rosewood to terminate its agreements with the developer. Rosewood argued that in addition to committing “numerous incurable defaults”, Baha Mar has “failed to perform its obligations under the Rosewood Hotel Agreements, and cannot perform its obligations as a result of the DIP Financing defaults, the uncertainty concerning its Chapter 11 case, and the competing proceedings and litigation commenced in The Bahamas”.
Rosewood said that because Baha Mar has failed to perform is obligations under the hotel agreements, and the developer has “no ability to cure such defaults”, cause exists for the Delaware Court to modify the automatic stay to permit Rosewood to terminate the Rosewood Hotel Agreements in accordance with their terms.
“Baha Mar is not performing its obligations under the Rosewood Hotel Agreements, including by not paying hotel employees, and Baha Mar cannot perform such obligations as a result of the DIP financing defaults. Accordingly, because Baha Mar cannot provide adequate protection to Rosewood pursuant to sections 362(d)(1) and 363(e) of the Bankruptcy Code, cause also exists for this Court to modify the automatic stay to permit Rosewood to terminate the Rosewood Hotel Agreements,” the hotel operator argued.