By NEIL HARTNELL
Tribune Business Editor
Baha Mar has accused its contractor of “obstructionist tactics” designed to undermine efforts to reach an out-of-court settlement, after it refused to agree to a one-week extension for objections to its bid to dismiss the Chapter 11 bankruptcy protection case.
The developer, in its latest salvo in the Delaware bankruptcy courts, alleged that China Construction America was attempting to divert attention away from the ongoing Beijing settlement negotiations during “a critical week” for the $3.5 billion project.
It acknowledged that “time is of the essence” in efforts to reach a negotiated settlement, due to the fact that the Government’s petition to wind-up Baha Mar - and replace the developer with a provisional liquidator - is set to be heard before the Supreme Court on Friday.
Calling for the Delaware Bankruptcy Court to intervene, and impose the one-week extension on China Construction America, the developer employed the same arguments it successfully used to deny the contractor a speedy hearing on its demand that all Chapter 11-related decisions be ‘stayed’.
Baha Mar, in papers filed with the Delaware courts late on Friday, argued that giving itself and others an extra week to object to China Construction America’s bid to dismiss the Chapter 11 case would free-up time and negotiations for the Delaware talks.
Significantly, Baha Mar is being supported in this effort by its unsecured creditors committee, which includes representatives from its hotel brand partner, SLS, and the joint venture involving Bahamian contractor, Osprey.
“The debtors [Baha Mar] believe it is critical that their full resources and attention be dedicated and devoted to these negotiations in order to maximise the prospects for a consensual resolution,” Baha Mar alleged in the latest battle of the Delaware ‘war’.
Should the negotiations taking place in Beijing succeed, Baha Mar argued that it would render all Chapter 11 actions and the Government’s impending winding-up action “moot”.
In a sign that the winding-up petition is starting to concentrate minds, and weigh on the minds of the parties, the developer’s legal papers added: “Given that the hearing in the Bahamas is scheduled for July 31, 2015, time is of the essence with respect to the negotiations.
“China Construction America’s refusal to consent to the requested extension is emblematic of its obstructionist tactics aimed at undermining the debtors’ efforts to achieve compromise in these cases/.
“Indeed, rather than consent to the proposed extension, China Construction America elected to serve discovery on the debtors that very day, further distracting the debtors’ attention from the settlement discussions.
“The debtors believe that a one-week extension of the Objection Deadline would focus the parties’ attention on settlement, not litigation, over the next critical week.”
Tribune Business revealed on Friday how China Construction America had filed court papers seeking permission to interrogate top Baha Mar executives on 24 separate issues relating to the developer’s Chapter 11 bankruptcy protection bid.
Baha Mar branded the issues raised by the contractor as “overly broad and unduly burdensome”, including many items “protected by attorney-client privilege”.
“Thus China Construction America’s purported ‘need’ for the information requested in the deposition notice for its reply rings hollow, given that a substantial portion of the material is not discoverable,” the developer alleged.
It claimed that rather than agree to a one-week extension, China Construction America’s attorneys offered “a mere 18 hours” on the grounds that they needed to assess Baha Mar’s objections before the August 6 deposition hearing.
“As an initial matter, costly and time-consuming discovery is antithetical to the purpose of the negotiations in Beijing: Reaching a consensual resolution of the disputes that will allow construction to recommence so that the Baha Mar project can be completed and opened to the public as soon as possible,” Baha Mar alleged.
“While the debtors acknowledge that discovery and litigation may be inevitable if the parties cannot reach a timely resolution of their disputes, it is nonsensical to divert the debtors’ and China Construction America’s current resources from settlement negotiations at the present time.”
Baha Mar added that preparing for China Construction America’s interrogation hearing on August 6 would also be “to the detriment of the negotiations in Beijing”
It said that if this discovery went ahead, it should be allowed to do the same with China Construction America. Yet time constraints meant this could not occur before Baha Mar filed its objections to the contractor’s bid to dismiss the Chapter 11 case in its entirety.
“The debtors should not be penalised for dedicating their resources over the next week to the settlement negotiations in Beijing, rather than simultaneously seeking to propound expedited discovery on China Construction America,” Baha Mar alleged.
It added that the one-week extension it is seeking would “maximise the prospects for a settlement in Beijing”.