The troubled developer behind the Bahamas’ most ambitious project – the $3.5bn Baha Mar mega resort (pictured) – today announced that its affiliated entities have filed a Chapter 11 Plan of Reorganization with the Bankruptcy Court in Delaware, USA.
The move comes after the developer accused the Bahamian government of pursuing a "perilous path" in seeking to have it liquidated.
The Plan of Reorganization is the next stage following on from an application for protection under Chapter 11 of the US Bankruptcy code, which the developer, Baha Mar Ltd., made on 29 June.
It sets out how the company proposes to repay its creditors while staying alive as a business.
A liquidator is a liquidator, not a party that knows Baha Mar, knows how to manage the resort, or has an economic and personal stake in its successful opening– Sarkis Izmirlian, Baha Mar Ltd. chief executive
Baha Mar Ltd.’s Chapter 11 bankruptcy is opposed by the government of the Bahamas, which is trying through the Bahamian Supreme Court to have the developer’s affairs taken over by a liquidator.
Work on the nearly complete resort stopped earlier this year amid a dispute over pay between Baha Mar Ltd. and the general contractor, the Bahamas unit of China Construction America (CCA), a subsidiary of state-owned China State Construction Engineering Corp (CSCEC).
The Chinese contractor and the project’s main financier, the China Exim Bank, also oppose the developer’s bid for US bankruptcy protection.
Separately, Baha Mar Ltd. has commenced a claim in the English High Court in London against CSCEC, seeking "a variety of financial remedies".
But Baha Mar Ltd. maintains that the US route is the best way to get the resort, considered a project of national significance, finished and open for business.
In a letter to staff on 22 August, Baha Mar Ltd.’s chief executive Sarkis Izmirlian accused the government of following a "perilous path" for the Bahamas in trying to shut his company down.
"As we have made clear, we are highly confident that the Chapter 11 process now underway provides the most assured path for Baha Mar to be completed properly and opened successfully as soon as possible," Izmirlian wrote.
"In contrast, the liquidation of Baha Mar proposed by the Government is a perilous path – one that could be highly costly, wasting the assets of Baha Mar to the significant disadvantage of its creditors, citizens and the longer term economic potential of The Bahamas.
"A liquidator is a liquidator, not a party that knows Baha Mar, knows how to manage the resort, or has an economic and personal stake in its successful opening."
In its statement today the developer said the plan presents a "viable framework for Baha Mar’s emergence from Chapter 11 and the expeditious resumption and completion of the construction of Baha Mar".
"Most notably," the statement said, "the plan provides that valid claims of Bahamian creditors and the Government of the Bahamas will be unaffected by the Chapter 11 and, upon implementation of the plan, would be paid in the ordinary course of business."
The resort, said the developer, stood to generate nearly 5,000 new jobs in the Bahamas, and have an annual payroll in excess of $130m, which would represent nearly 12% of the Bahamian GDP.
The Baha Mar entities that are debtors in the chapter 11 cases currently pending before the United States Bankruptcy Court for the District of Delaware are: Northshore Mainland Services Inc. (9087); Baha Mar Enterprises Ltd.; Baha Mar Entertainment Ltd.; Baha Mar Land Holdings Ltd.; Baha Mar Leasing Company Ltd.; Baha Mar Ltd.; Baha Mar Operating Company Ltd.; Baha Mar Properties Ltd.; Baha Mar Sales Company Ltd.; Baha Mar Support Services Ltd.; BML Properties Ltd.; BMP Golf Ltd.; BMP Three Ltd.; Cable Beach Resorts Ltd.; and Riviera Golf Ventures Ltd..