Baha Mar Resort Project Files for Chapter 11 Bankruptcy

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Above: the Baha Mar in Nassau

By the Caribbean Journal staff

The Caribbean’s largest resort project has hit a major hurdle.

The $3.5 billion Nassau megaresort, which had already delayed its scheduled openings in December and March, has voluntarily filed for Chapter 11 Bankruptcy protection in US Bankruptcy Court in Delaware.

Baha Mar, Ltd will be filing an application in the Supreme Court of The Commonwealth of the Bahamas seeking approval of the U.S. court orders.

In a statement, Baha Mar CEO Sarkis Izmirlian blamed the project’s contractor, a state-owned Chinese company.

“The general contractor repeatedly has missed construction deadlines,” Izmirlian wrote. “Unable to open, the resort has been left without a sufficient source of revenue to continue our existing business.”

Izmirlian said the general contractor had made guarantees ahead of the resort’s previous planned November 2014 and January 2015 openings.

“Construction on the project remains incomplete and, consequently, we have not been in a position to set a revised opening date,” Izmirlian said. “Thus, the Chapter 11 process is the best path for Baha Mar to now undertake.”

“The people of The Bahamas should no longer have to endure the adverse effects of the general contractor not fulfilling assurances regarding the completion of Baha Mar’s construction, forcing in turn embarrassing delays of Baha Mar’s opening,” Izmirlian said. “Nor should members of the travel industry and guests continue to face understandable frustration and disappointment caused by the failure to complete construction. All of this now stops with and can be remedied through the Chapter 11 process.”

The company said the Chapter 11 filing would mean protection from creditor actions and claims against the company and its assets.

“Baha Mar believes that a negotiated solution is possible among the existing parties to the resort project that would lead to its completion and successful opening,” Izmirlian said. “To position ourselves to achieve that goal, and to allow time to explore a consensual solution, Baha Mar will continue for a period to operate and fund payroll. We will do our very best to continue to engage the resort’s lender to reach a consensual resolution that assures our ability to complete construction and open successfully. However, if we cannot reach a consensual resolution in the next few weeks, we will have to make some extremely difficult decisions that would include workforce reductions.”

The massive resort project in New Providence is slated to include four hotels: a Rosewood, a Grand Hyatt, an SLS Lux and the eponymous Baha Mar Hotel and Casino.

The project is the largest of its kind in the history of the Caribbean.

The company said its Melia Nassau Beach Resort would continue operating normally during the Chapter 11.

“I am committed to doing all I realistically can to move Baha Mar forward to be completed and opened successfully,” Izmirlian said. “I am confident that, once opened, Baha Mar will be a world-class destination resort that will attract guests from around the world and serve as a key economic sparkplug to The Bahamas. The Chapter 11 process provides the appropriate venue to create a viable financial structure that places Baha Mar’s interests foremost.”

In a statement issued late Monday, Bahamas Prime Minister Perry Christie said his government was “available” to all parties involved, but that it would “not be taking anyone’s side.”

“Instead, the government will at all times continue to optimize its value as a mediator between the parties so as to ensure that the interest of Bahamian workers and indeed the interests of the nation as a whole are accorded primacy at all times,” he said.

“The government remains hopeful that with the continued exertion of good faith efforts by all concerned, the Baha Mar resort will not only open soon but will fulfill its promise as an important new dimension in Bahamian and regional tourism and one that will represent a major contributor to Bahamian employment,” he said.

 

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