By AVA TURNQUEST
Tribune Chief Reporter
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.