Embattled Baha Mar Ltd., developer of the $3.5bn resort of the same name in the Bahamas, has suffered a further blow after one of four major hotel operators signed up to the scheme launched a bid to have its contract annulled.
The surprise manoeuvre by Rosewood Hotels and Resorts International came last week as Baha Mar argued in the Bahamas Supreme Court against a Bahamian government bid to have its affairs taken over by a liquidator.
Rosewood cited ‘numerous incurable defaults’ on the original contract signed with Baha Mar in 2011.–
The nearly complete Baha Mar resort was meant to open in December 2014 and then in March this year, but the developer has filed for bankruptcy protection in the US state of Delaware and is fighting legal battles against the Bahamian government and also China State Construction Engineering Corporation (CSCEC), the state-owned parent of the contractor building the resort, China Construction America (CCA).
Last week on 19 August Rosewood filed a motion in the Delaware bankruptcy court asking to be excluded from a freeze on actions against Baha Mar Ltd. offered by protections under Chapter 11 of the US bankruptcy code.
In court filings seen by Bahamian newspaper The Tribune, Rosewood cited "numerous incurable defaults" on the original contract signed with Baha Mar in 2011 and claimed that its brand is being "tarnished each day as a result of its ongoing association with Baha Mar".
Rosewood specifically argued that the developer did not have enough money to uphold its obligations under the contract, and that it did not own the land the resort is built on.
A hearing on Rosewood’s motion will be held in the Delaware court on 18 September.
In a letter to Baha Mar Ltd. staff, Sarkis Izmirlian, the developer’s chief executive, said the company would "vigorously oppose" Rosewood’s motion, and blamed the government for driving Rosewood to file it.
The other hotels signed up to the resort on Cable Beach in Nassau are the 707-room Grand Hyatt, a 300-room SLS Lux, and the 694-room Meliá, as well as Baha Mar’s own-branded 1,000-room Casino Resort & Hotel.
Rosewood filed its motion in Delaware on the same day a hearing began in the Bahamas Supreme Court on the government’s winding-up petition.
The government wants to pull the matter out of the US court and have a liquidator appointed to settle Baha Mar’s affairs, but the developer is resisting in hopes that under US Chapter 11 protection it can survive and pursue its claims against the Chinese contractor.
After three days of hearings, however, the Bahamian Supreme Court judge called for a two-week adjournment to consider the matter. Hearings on the winding-up petition resume on 4 September.