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Baha Mar Developer Hits Out Following Receivership

Baha Mar’s original developer Sarkis Izmirlian.

Baha Mar’s original developer Sarkis Izmirlian.

By RASHAD ROLLE

Tribune Staff Reporter

rrolle@tribunemedia.net

BAHA Mar developer Sarkis Izmirlian yesterday broke his silence on the Supreme Court’s appointment of a receiver to the stalled project, saying the move is a part of a pattern of “disastrous actions” that have led to Baha Mar’s continuing struggle to be completed and opened this year.

In a statement released by BMD Holdings, Mr Izmirlian pulled no punches in criticising the Christie administration and the resort’s Chinese stakeholders, accusing them of being “more focused on legal and political manoeuvres than on solutions.”

He also accused the resort’s general contractor China Construction America (CCA) Bahamas of engaging in “reckless and self-serving” behaviour at the expense of Baha Mar, adding that the contractor appears to be continuing the same pattern at its own development in downtown Nassau, The Pointe.

His statement came after Deloitte & Touche Managing Partner Raymond Winder, with the firm’s partners from China were appointed Baha Mar receivers on behalf of the Export-Import Bank of China, which is Baha Mar’s secured creditor through its $2.45 billion mortgage debenture. The move sidelines Mr Izmirlian by removing him as owner of the project he created and in which he had invested $850 million.

“The appointment of a receiver by the Export-Import Bank of China continues the unfortunate pattern of disastrous actions taken by other stakeholders since Baha Mar has filed for Chapter 11 that have moved Baha Mar further from completion and are now destroying any hope that Baha Mar, as originally conceived for the Bahamas, can become a reality,” Mr Izmirlian said. “I, along with thousands of Bahamians, have worked very hard to make Baha Mar a reality.

“The facts are straightforward. China Construction America failed to meet its promises to complete the resort on the timetables it set, and failed to meet its financial obligations to Baha Mar, engaging in reckless and self-serving actions at the expense of the project as it now seems to be doing as well at The Pointe, in downtown Nassau. The government of the Bahamas failed to meet its promises to Baha Mar, including making timely payments of monies it was obligated to pay Baha Mar. The result was a liquidity crunch last June that put Baha Mar at risk. To mitigate that risk, the board of Baha Mar determined that the proper, and only truly viable course, was for Baha Mar to voluntarily file for Chapter 11 (bankruptcy protection) under US law, a reorganisation option that does not exist in the Bahamas as the provisional liquidation has now proven.”

He added: “Under Chapter 11, Baha Mar’s assets would have been protected; we would have had the opportunity in a prudent manner to try to resolve the issues between the parties; we put forward a plan to pay all valid Bahamian claims in full; we were able to continue to pay the salaries of the more than 2,000 Baha Mar employees; and any downsized employees would have received severance which sadly they will now not receive.”

The Christie administration has disputed Mr Izmirlian’s notion that Baha Mar would have been on a path to completion if it had gone through the Chapter 11 process, pointing out that resort officials had a contingency plan in its bankruptcy filings to make staff redundant.

Still, Mr Izmirlian said: “The government of the Bahamas, in concert with China Construction America and CEXIM, undertook a campaign that resulted in the Chapter 11 being dismissed. The effect of this effort by the government of the Bahamas, China Construction America and CEXIM now leaves Baha Mar in the position where CEXIM bank is now the owner of Baha Mar; most of its employees have been laid off; widespread collateral damage to hundreds of businesses; and its assets are being further impaired.”

“Even under these circumstances, I have continued to try to make proposals to achieve a consensual resolution of the issues that would enable Baha Mar to be properly completed and to open. Unfortunately, the other stakeholders remain more focused on legal and political manoeuvres than solutions. Neither CEXIM appointing a receiver, nor a winding up/liquidation of Baha Mar, serve the best interests of any party and certainly not those of the people of the Bahamas. At the end of the day, whilst we want to see a beautiful resort open, the goal is also a thriving Bahamas.”

Baha Mar filed for Chapter 11 bankruptcy protection in a US Bankruptcy Court for 15 of its companies on June 29.

However, in September, a US judge threw out the Chapter 11 cases for Baha Mar’s Bahamian companies.

Judge Kevin Carey in his written ruling concluded: “Chapter 11 of the United States Bankruptcy Code, with all stakeholders participating, under these circumstances, would be an ideal vehicle for the restructuring of this family of related companies with the ultimate goal of finishing a project said to be 97 per cent complete and, upon its exit from Chapter 11, to be in sound financial footing, with appropriate treatment of creditors. I am consequently disappointed that the parties have been so far unable to formulate a consensual exit strategy, whether that would involve taking a plan to confirmation or providing for an agreed dismissal as part of a consensual resolution of their disputes.”

On September 4, Edmund Rahming of KRyS Global, Mark Nicholas Cropper and Alastair Beveridge of AlixPartners Services UK were appointed as joint provisional liquidators and given the task of overseeing the company. In October, the joint provisional liquidators got approval from the Supreme Court to make 2,020 Baha Mar employees redundant due to the resort’s insolvency.

After the Supreme Court’s ruling on Friday, Mr Winder said receivership would allow for the continuation of the process started by the court appointed liquidators.

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