By NEIL HARTNELL
Tribune Business Editor
Baha Mar's contractor has been warned by a Florida judge that it is "rare" to obtain the injunction it views as vital to hitting the $4.2 billion project's October 15 completion date.
China Construction America (CCA) Bahamas, in new legal filings on Friday, piled on the rationale for why it, Baha Mar and the Bahamas will suffer "irreparable harm" if it fails to get its hands on 1,420 lounge chairs intended for the project.
The Chinese state-owned contractor this time cited Baha Mar's forecast economic impact, and the project's importance to the Bahamas' sovereign creditworthiness, as additional reasons - along with damage to its own reputation - as to why Florida-based Source Outdoor should be compelled to hand over the chairs.
CCA Bahamas sought to buttress its case after the judge hearing the matter suggested it was difficult for the contractor to obtain the injunction it is seeking on the basis of "irreparable harm".
"During the telephonic hearing on July 12, 2017, the magistrate judge suggested to the parties that injunctive relief is a contract dispute was a somewhat 'rare' occurrence," CCA and its US attorneys conceded.
"That is, the irreparable harm requirement for injunctive relief is difficult to establish."
CCA is seeking an injunction where the south Florida federal court would order that the 1,420 chairs be "delivered immediately" to its Miami-based freight forwarder for onward shipping to the Bahamas.
Given the doubts expressed by the judge, CCAs attorneys rapidly went to work on finding case histories to support their case, as well as embellishing the 'irreparable harm' that it will suffer.
"The project for which the chairs are intended is 'one of the most significant single phase resorts currently under development in the western hemisphere'," CCA noted in its legal filings. "Once completed it will generate nearly 5,000 jobs and its projected to have an annual payroll in excess of $130 million, representing 12 per cent of the GDP of the Bahamas.
"It is expected to have a significant impact on the bond rating of the Government of the Bahamas." Strangely, CCA's legal filings made no mention of the recent 'downgrade review' imposed by Moody's, which could cause the Bahamas to suffer a second cut to 'junk' within an eight to nine-month period.
The contractor, though, continued to be exercised by the potential fall-out to its reputation, which has already taken a battering in the eyes of many Bahamians after it missed numerous Baha Mar completion deadlines under former developer, Sarkis Izmirlian, resulting in the eventual Chapter 11 bankruptcy protection filing and bitter legal dispute.
"Failure of CCA to complete this aspect of the project would result in intense scrutiny and unprecedented derogatory publicity directed at CCA at the peak of the Bahamian tourist season," the contractor warned.
"CCA is contractually obligated to provide the chairs to the project for which they are intended by October 15, 2017. Failure to provide the chairs by this date exposes CCA to liquidated damages of $150,000 per day, escalating to $250,000 per day.
"It is not possible to calculate in monetary terms the damage to the reputation of a major construction firm it it is unable to meet the terms of its agreement with the owner of a project of this size, importance and economic significance of the Baha Mar development. A project heavily scrutinised by the Government of the Bahamas, by the bond rating agencies, by the press and the populace."
CCA appears to have placed itself in this position by admitting that it "assumed responsibility for the procurement and delivery of furniture, fixtures and equipment" for the $4.2 billion project. This means it will not hit 'substantial completion' until the promised lounge chairs are delivered.
Edison Sumner, the Bahamas Chamber of Commerce's chief executive, previously told Tribune Business he had been reassured by Baha Mar's prospective new owners, Chow Tai Fook Enterprises (CTFE), that CCA's dispute would have no impact on the resort's next opening phases or operations.
These include the opening of the SLS Lux property in October 2017, followed by completion and opening of the Rosewood in time for March/April 2018 and the peak winter tourism season.
Source Outdoor is allegedly withholding the lounge chairs as 'leverage' to force payment of pre-Chapter 11 debts owed to it by Baha Mar.
CCA is alleging that it has no responsibility for these debts, and that these have no connection to the $390,500 chairs shipment, which it has already fully paid for. Yet the Chinese contractor's lawsuit makes no mention of its role in the Baha Mar creditor payout process.
Instead, CCA is alleging that Source Outdoor is now selling Baha Mar's lounge chairs "on the open market" in a bid to recover debts owed by Mr Izmirlian prior to the ill-fated bankruptcy protection filing in the US courts.