Baha Mar’s original developer Sarkis Izmirlian.
By NEIL HARTNELL
Tribune Business Editor
Sarkis Izmirlian has accused Baha Mar's main contractor of "cherry picking" and "distorting" legal quotations to underpin its "shareholder oppression" counter-claim against him.
Baha Mar's original developer, and his BML Properties vehicle, are alleging that China Construction America (CCA) and its affiliates are selectively quoting prior legal rulings to uphold their bid to bring a claim under Bahamian law before the New York State Supreme Court.
Mr Izmirlian, in his latest effort to have CCA's $150m claim against him thrown out, sought to turn the tables on the Chinese contractor's assertion that a Bahamian ruling cited by his attorneys actually undercut his own case.
He alleged that CCA's legal team had quoted one sentence favourable to their case in papers filed with the court, but then ignored the next ten sentences that backed the original Baha Mar developer's contention that a section 280 claim under the Bahamian Companies Act can only be brought if the shareholder oppression is ongoing.
"Yet as [CCA] has continuously done, it cherry picks, thus distorts quotations, neglecting to provide the immediately following language," Mr Izmirlian and his attorneys said in late September legal filings with the New York State Supreme Court.
"Immediately after [CCA's] intentionally truncated quotation, the court explains that Section 280 can only be used when there is a present interest being oppressed." This has not been the case for four years, Mr Izmirlian and BML Properties are arguing, because they lost control of the $4.2bn Baha Mar development when it was placed into provisional liquidation, then receivership, in late 2015.
"Baha Mar was in provisional liquidation and receivership since July 2015," Mr Izmirlian's legal filings reiterated. "Therefore, BML Properties long ceased control over Baha Mar when this action was commenced in 2017; indeed for more than two years prior to the time this action was commenced. As a matter of law, BML Properties has long been incapable - and is incapable - of engaging in any such conduct, so the Section 280 claim is plainly moot."
This directly attacks the arguments of CCA's attorneys, including Wayne Munroe QC, who previously rejected arguments that so-called "shareholder oppression" needed to be present or ongoing for his client's claim to have merit.
However, Mr Izmirlian and his attorneys reiterated: "The corporation [Baha Mar] no longer exists and [CCA] never held voting shares. The provision of Bahamian law that [CCA] wishes to rely upon not only requires that its action be brought before the Bahamian courts, but that it seek relief that is not available here.
"Just as [CCA] should not be allowed to ignore the Investors Agreement, it too should not be allowed to ignore the very elements of the Bahamian law it purports to rely upon." They also argued there was legal precedent as to why the New York court should not hear arguments based on Bahamian companies law.
CCA's "shareholder oppression" claim alleges that Mr Izmirlian's decision to seek Chapter 11 bankruptcy protection for the $4.2bn project was a key factor that cost them their $150m preference share investment in the mega resort development.
As a result, the Chinese state-owned construction company claimed in papers filed with the New York State Supreme Court that it should be "compensated for the loss of benefits" associated with its investment in accordance with The Bahamas' Companies Act.
Mr Izmirlian and his BML Properties vehicle held 100 percent of Baha Mar's equity, and controlled four of five Baha Mar Board seats compared to CCA's one, leading the Chinese contractor and its affiliates to allege that the resort's original developer exploited this to his advantage and its detriment.