Seven months behind schedule and still with no firm opening date for the most expensive development in Bahamas history, Baha Mar's developers last week filed for Chapter 11 bankruptcy protection in the U.S. and sued the project's general contractor in a British court.
The developer, Baha Mar Ltd., on June 30 said it had filed a claim in the English High Court against the China State Construction Engineering Corp., a division of China Construction America (CCA). The claim stems from what Baha Mar Ltd. said was a series of delays that caused the resort to repeatedly miss its opening deadlines.
The megaresort, which is to include four new hotels on Nassau's Cable Beach totaling more than 2,200 rooms as well as upgrades to an existing 694-room hotel, was first slated to open last November.
In the lawsuit, the developer alleges that the contractor was liable for not meeting "guarantee and performance obligations related to the construction of the project, and that Baha Mar Ltd. is entitled to and claims against the defendant a variety of financial remedies."
Baha Mar Ltd. filed the lawsuit the day after filing for Chapter 11, which Baha Mar Ltd. CEO Sarkis Izmirlian said would help get the $3.5 billion project done. As part of the bankruptcy filing, Baha Mar Ltd. said it had arranged for debtor-in-position financing for as much as $80 million to help finish the project. Baha Mar Ltd., which planned to tap into as much as $30 million of that amount within the next 30 days, said July 1 that the bankruptcy court approved that arrangement.
As for a potential opening date, Baha Mar Ltd. spokesman Ross Lovern would only say the project would debut "as soon as practicable" and declined to be more specific.
All four new hotels in the project -- the 1,000-room Baha Mar Casino Resort & Hotel, the 707-room Grand Hyatt at Baha Mar, the 300-room SLS Lux at Baha Mar and the 200-room Rosewood at Baha Mar -- have pulled reservations capabilities off their websites.
The project's fifth hotel and lone pre-existing property, the 694-room Melia Nassau Beach, remains open as it completes its renovations and conversion to the Melia at Baha Mar early next year.
In his June 30 statement, Izmirlian said the China State Construction Engineering Corp. had made guarantees that the project would open in November 2014, and then later changed the opening date to late March 2015. Based on those deadlines, Izmirlian said Baha Mar Ltd. had hired almost 2,000 people at the resort. The developer also said it had unsuccessfully sought funding from its primary lender, Export-Import Bank of China, in order to help complete the project.
Additionally, the Bahamas' Tribune reported early last week that CCA demanded $343.8 million from Baha Mar Ltd. for four months of work ending May 2015, or more than four times the $76.1 million Export-Import Bank of China said the contractor was owed. The newspaper attributed those assertions to Baha Mar Ltd. President Thomas Dunlap.
Lovern declined to comment.
Baha Mar Ltd. filed for Chapter 11 in the U.S. Bankruptcy Court in Delaware, and will file an application in the Supreme Court of the Bahamas seeking approval of the U.S. court's orders. The developer, in its June 29 court filing, listed more than $125 million in debt, including $72.6 million owed to CCA and $19.5 million to Bahamas Electricity Corp.
A spokesman for SLS parent SBE Entertainment said last week that SBE principal Sam Nazarian was out of the country and couldn't be reached for comment. Rosewood declined to comment, while Hyatt declined to respond to a request for comment last week.
Where that leaves tour operators tasked with booking stays at Baha Mar depends on the company, though three operators contacted last week said they were not surprised at the bankruptcy news, given the repeated delays.
Pleasant Holidays suspended FIT and group sales of the Grand Hyatt, the Baha Mar Casino & Resort and SLS Lux on June 29, the day the bankruptcy was filed.
The programs were to have taken effect Nov. 1 and onward. Rosewood had never been part of the equation.
"We have bookings for those Baha Mar hotels for travel from Nov. 1," said Pleasant Holidays CEO Jack Richards. "Once we complete a full review and discuss with Baha Mar sales, we will make a decision on the best course of action, such as relocation. It really depends on a good-faith estimate of the completion of the construction project. Preliminary data from the bankruptcy filing indicates that the resorts are about 97% complete, so we will continue to research and discuss with Baha Mar representatives."
Delta Vacations followed suit. The operator had been offering packages for travel beginning Jan. 4 that included stays at all four properties. Until further notice, however, it no longer is taking any new bookings until a new opening date is announced, according to Elizabeth Moriarty, vice president for product development.
"Delta Vacations customers who have purchased stays at Baha Mar will have the ability to reschedule their vacations to a later date or we will assist them in selecting new accommodations for their current reservations in the Bahamas," she said.
Classic Vacations President David Hu said last week that the company has "plenty of buffer to the opening dates to be able to make any changes over the coming weeks," though he declined to be more specific about which dates Classic Vacations started booking Baha Mar stays or on any policy changes, citing the fluid nature of the project.
Baha Mar broke ground in Nassau's Cable Beach area in February 2011. The project had been scheduled to open to the public by the end of 2014 until last August, when the opening date was pushed back until this spring. In late March, the project's grand opening was pushed back to early May, and since then, the developer has not been specific about another potential opening date.