Baha Mar Resorts To Chapter 11 Bankruptcy, Blames China Construction For Delays
Baha Mar, the massive new resort in the Bahamas that has been plagued with delays, announced today that it is filing for Chapter 11 bankruptcy protection.
The $3.5 billion new development, to contain four hotels, a Jack Nicklaus golf course, and more than 40 restaurants, was supposed to open in December, then March. But that hasn’t happened. Developer Sarkis Izmirlian blamed the delays of his dream project squarely on the contractor, China Construction America, which is majority-owned by the Chinese government.
“The general contractor repeatedly has missed construction deadlines,” Izmirlian said in a statement. “This has caused both sizeable delay costs and forced the resort to postpone its opening. Unable to open, the resort has been left without a sufficient source of revenue to continue our existing business.”
Baha Mar’s board of directors decided that Chapter 11 “is the best path to provide the time to put in place a viable capital structure and working relationships to complete construction and successfully open Baha Mar,” Izmirlian announced in the statement. The filing was made in the U.S. Bankruptcy Court for the District of Delaware.
The construction process has been problematic on several fronts. On top of the delays, it was politically fraught: hundreds of Chinese were shipped in as workers despite the fact that the unemployment rate is high. Local contractors who were involved complained that they were regularly paid late. At least two Chinese workers have died on-site, one in May when he was electrocuted by a power line while driving a dump truck; a Bahamian worker was crushed by a crane in April.
Izmirlian is arranging the funding for the Debtor-in-Possession (DIP ) financing facility of up to $80 million; up to $30 million will be used by Baha Mar in the next 30 days, the statement said.
The statement did not specify a new time frame for opening the resort.
Milbank, Tweed, Hadley & McCoy, LLP and Kobre & Kim, LLP are acting as legal advisors to Baha MAra, and Moelis & Company is acting as financial advisor to the filing entities.
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