Liquidation hearings delayed, Baha Mar's future remains iffy

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A rendering of the Baha Mar resort.
A rendering of the Baha Mar resort.

A year after its originally scheduled opening date, the Bahamas' stalled Baha Mar resort appears to be getting progressively further from completion.

The Bahamas Supreme Court late last month delayed any more hearings on the project's potential liquidation until February in hopes that the project's developer, lender and contractor would negotiate an agreement on how to complete the $3.5 billion project.

Still, with Baha Mar missing the 2015-16 peak season, developer Sarkis Izmirlian continues to cite the actions of contractor China Construction America, as well as the Bahamas government and its unwillingness to allow the developer to file for bankruptcy protection, as primary reasons for the impasse.

"If the Chapter 11 process had been allowed to proceed, we would very likely be in a very different and productive place today," Izmirlian said in a Dec. 9 statement. "It is too bad that self-serving agendas have usurped the Baha Mar vision and replaced it with the likes of Joint Provisional Liquidators and bank-appointed receivership."

Further complicating matters is an additional $50 million loan to pay for the services of Deloitte, the receiver appointed in October by the project's primary lender, Export-Import Bank of China.

Since that loan was made by China Harbour Engineering Co. and not Export-Import Bank, it is preferred debt, meaning that its repayment takes priority over longer-term creditors such as the contractor and employees, according to a recent report in the Bahamas Tribune.

Representatives for the developer, Export-Import Bank and the Bahamas government did not respond to requests to confirm the report.

At stake is a project that was slated to employ more than 2,000 people, or about one in 190 Bahamas residents (for comparison, the U.S. federal government workforce accounts for about one out of 160 U.S. civilians).

Baha Mar, the most expensive private project in Bahamas history, broke ground in Nassau's Cable Beach area in February 2011, and the five-hotel project originally was scheduled to open to the public by the end of 2014.

The developer filed for bankruptcy in June, but the U.S. Bankruptcy Court in Delaware threw out the case in September. That same month, the project's workers were laid off.

As a result, the project's delays have been accentuated by contentiousness and have even generated rumors among the local population that the project may have been sabotaged by property destruction under either the direction of the general contractor, which is still owed about $74 million, or its Chinese workers angry about delayed payments.

Although those rumors are widespread, none of the involved parties has addressed them publicly.

The Bahamas government, in a Dec. 1 statement, said it "continues to be fully committed to the resumption and completion of development at Baha Mar, as well as to the opening of the resort under private ownership and operation."

Still, recent reports of a "white knight" developer's potential involvement have given some hope to Bahamas residents. Last month, the Bahamas Tribune reported that retired developer Sol Kerzner was in talks with New York-based banker Andrew Farkas about possibly taking over and completing the project.

Kerzner redeveloped the Bahamas' Atlantis Paradise Island after buying the resort in 1994 (his company sold the property to Brookfield three years ago).

The Tribune reported that hotel-casino operator MGM Resorts International might also get involved.

Kerzner could not be reached by Travel Weekly. An MGM spokesman denied the report.

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