Three significant events bearing on the future of the opening and operating of the massive .5 billion Baha Mar casino resort in the Bahamas occurred last week.
One, a U.S. bankruptcy judge dismissed Baha Mar Ltd.’s attempt to pursue bankruptcy in the U.S. Two, the Bahamas Supreme Court gave the trouble resort two months to get its financial affairs in order so that the resort can open and begin operating. Three, court appointed two provisional liquidators took over the resort to preserve its assets: KRyS Global, based in the Bahamas and AlixPartners, based in the United Kingdom.
Last week a bankruptcy judge in Delaware dismissed the resort’s chapter 11 petition, ruling that no “greater good” would result from allowing what is largely a Bahamian issue to be taken up by a U.S. court. It made one exception, Northshore Mainland Services Inc., which is incorporated in Florida and manages U.S. operations.
The case was filed in June as the company sought a resolution of its dispute with its contractor and primary lender, which are both based in China. At the same time the Bahamian government has sought to take control of the project and complete it.
Baha Mar’s creditors had requested that the U.S. case be dismissed.
The U.S. judge called the bankruptcy filing “an international case,” but stated that the Bahamian government has the largest stake in it. The island nation’s economy depends to a degree on the multi-billion-resort opening. It is estimated that it is about 97 percent completed. The judge noted that the Supreme Court of the Bahamas had ruled that the project’s debtors expect bankruptcy proceedings to happen in that country.
Baha Mar Ltd. is the owner and developer of the resort. The company is operating under the assumption that the liquidators just appointed won’t liquidate the management team or the company’s assets. The government’s assertion is that all authority has been given to the liquidators.
The Supreme Court’s order gives the liquidators the authority to, “take possession of, collect and protect all of the assets of Baha Mar and in particular the books, records, computer equipment and other tangible assets” and promote a “scheme/plan of compromise” between the resort and its debtors.
In giving the resort two months to get its affairs in order, the Bahamas Supreme Court announced that it would not hear the government’s “winding down” petition until November.
China Construction America (CCA) was building the resort. It stopped work several months ago, claiming that it had not been paid in several months and that it is owed $72 million. It claims that Baha Mar had refused to reach an agreement with it and the Export Import Bank of China (EXIM). EXIM has declined to provide the $400 million to pay CCA to finish the work. It has already provided $2.5 billion for the project.
