The Baha Mar resort’s Chinese lender has decided to foreclose on the $3.5 billion resort in the Bahamas and has appointed a receiver to bring the delayed project to completion, roughly six weeks after it was thrown out of bankruptcy protection in the U.S.
The move by the Export-Import Bank of China, which received Bahamian court approval to name Deloitte to the receiver role, comes a few weeks after some 2,000 employees in the Bahamas lost their jobs at the partially completed resort at the request of court-appointed liquidators. The employees had been kept on the payroll at the partially completed resort with the help of the Bahamian government.
In a statement, the chairman of the Bahamas Progressive Liberal Party, which is the also the party of the islands’ prime minister, called the move by China’s bank “positive news” that could create “a new era of cooperation” and may ultimately see those employees hired back.
However, Sarkis Izmirlian, the resort’s developer, said in a statement Monday to The Wall Street Journal that the action “continues the unfortunate pattern of disastrous actions taken by other stakeholders.” He added that had the resort been allowed to stay in chapter 11 bankruptcy in the U.S. this outcome could have been avoided.
Bahamian Prime Minister Perry Christie hasn’t commented on the news. However, last week the attorney general for the Bahamas, Allyson Maynard Gibson, said the government “categorically rejects any suggestion that the [job losses] adopted by the joint provisional liquidators could have been avoided if Baha Mar had continued to pursue bankruptcy reorganization in the United States.”
Since filing for chapter 11 bankruptcy in the U.S. in June amid a cash crunch and disagreement with its contractor, the players in the Baha Mar saga—Mr. Izmirlian, the Export-Import Bank of China, contractor China Construction America and the Bahamian government—have been unable to reach an agreement on how to move the project ahead. Upon completion the resort is expected to represent 12% of the island nation’s gross domestic product.
With a consensual resolution seemingly out of reach, an insolvency proceeding in the Bahamas has moved forward. The resort’s next hearing in the Bahamas was to take place Monday, but has been delayed.
None of the other parties, including a lawyer that represents the Export-Import Bank, the government of the Bahamas and China Construction America, which is a subsidiary of China State Construction Engineering Corp., responded to requests for comment on the receivership.
Baha Mar Ltd., the Bahamas-based developer, filed for bankruptcy in the U.S. on June 29, claiming $2.7 billion in debt, mostly owed to the Export-Import Bank. After that, the Bahamian government placed the resort into insolvency proceedings in the Bahamas.
Construction on the project has halted amid the legal disputes but upon completion the resort is expected to have 2,200 rooms in four hotels, including the Hyatt, Rosewood and SLS Lux brands. Work began in 2011 and is said to be 97% complete.