The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Baha Mar yesterday slammed its contractor for trying to “undermine and disrupt” negotiations to settle their dispute by seeking a speedy hearing of its bid to ‘freeze’ all Chapter 11-related actions.

Branding China Construction America (CCA) as “the chief culprit” behind the $3.5 billion project’s woes and legal battles in three nations, Baha Mar’s Delaware filings accused the contractor of following its “own selfish motives and agenda” in seeking to stay any further bankruptcy court decisions.

Baha Mar ultimately scored a small victory, although not the one it wanted, when Bankruptcy Judge Kevin Carey yesterday denied China Construction America’s bid for an August 3 hearing on its motion for the court to ‘defer’ all Chapter 11-related decisions.

Judge Carey instead ruled that the motion be heard two weeks later on August 17, when he will also decide on China Construction America’s other action - its bid to completely dismiss Baha Mar’s Chapter 11 case.

Baha Mar, meanwhile, pledged that it would “contest” the Government’s petition to wind-up its 14 Bahamas-based companies, which is set for July 31.

The developer added that this date had been set “to enable the parties” - including itself and China Construction America - to settle their dispute out-of-court via negotiations that are taking place in Beijing.

Arguing that a speedy hearing on the contractor’s Chapter 11 ‘deferral’ bid would be counter to such a goal, Baha Mar alleged: “While the debtors [Baha Mar] will object to CCA’s dismissal motion in due course, CCA’s reckless course of action in seeking to have the suspension [deferral] motion heard on shortened notice threatens to undermine, disrupt and divert critical resources from delicate negotiations currently taking place in Beijing, China, aimed at resolving the primary dispute in these Chapter 11 Cases and facilitating the opening of the resort.

“For its own selfish motives and agenda, CCA urgently requests that the court stay final consideration of normal, customary and routine motions necessary to effectuate the debtors’ smooth transition into chapter 11.

“Rather than promote ‘efficiency’, CCA’s actions will punish and hurt employees, customers, critical vendors, brand partners, utilities, insurance providers and other innocent third parties, and cut off the Debtors’ final access to [$80 million] DIP financing, all in an effort to make it more likely that these Chapter 11 Cases fail and the Court dismisses them.”

Baha Mar blasted China Construction America’s two motions as “mere litigation tactics”, arguing that they were designed to “divert attention from its liability and culpability” as the “chief culprit” in the dispute.

“Indeed, CCA’s repeated failures to perform as contractor are the subject of a lawsuit currently pending in the UK seeking over $150 million in damages, and have resulted in the debtors’ liquidity issues, delayed openings of the resort, and the current predicament before this court,” Baha Mar alleged.

“CCA also speculates in the suspension motion that any further relief granted by this court could be duplicative or irreconcilable with rulings from the Bahamas.

“CCA conveniently ignores the fact that there is no current insolvency case pending in the Bahamas. Rather, an application has been filed seeking the appointment of a provisional liquidator, which the Debtors will contest.

“No order has been entered on such matter at this time. To the contrary, hearings in the Bahamas have been continued to July 31, 2015 – presumably to enable the parties (including CCA) to continue negotiations in Beijing,” Baha Mar added.

“Indeed, CCA’s request for expedited consideration of the Suspension Motion would be antithetical to this same objective.”

With the developer continuing to ‘point the finger of blame’, and the mutual vitriol between the two sides having not let up, the prospects for a negotiated settlement between Baha Mar and China Construction America - the key to resolving the $3.5 billion impasse - appear bleak indeed.

Baha Mar successfully argued to the Delaware Bankruptcy Court that China Construction America had failed to prove the existence of “a dire emergency” requiring a quick hearing of its ‘deferral’ bid.

It alleged that if the contractor’s motion was granted, all parties to the Baha Mar dispute would be forced “to divert their attention and energies from other pressing matters in order to respond to the suspension motion, all to the detriment of the ongoing settlement in negotiations in China”.

Baha Mar added that the costs involved in a speedy hearing of China Construction America’s ‘deferral’ motion would be something it could “ill afford”.

“CCA’s proposed shortened schedule is wholly unreasonable given the gravity of the relief being sought: A complete shutdown of the Chapter 11 cases pending a ruling on the motion to dismiss,” Baha Mar alleged.

“The debtors and other parties in interest would be severely – and unnecessarily – prejudiced by not having the full period provided under the Bankruptcy Rules to respond fully and effectively in order to preserve their rights in the ongoing Chapter 11 cases.”