Joel R. Glucksman
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Baha Mar Filing for Chapter 11 Bankruptcy Protection
Author: Joel R. Glucksman
Date: July 30, 2015
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Baha Mar, Ltd, the new 1,000 acre mega-resort in the Bahamas, recently announced that it will voluntarily file for Chapter 11 bankruptcy protection. The announcement of Baha Mar filing for Chapter 11 came after a series of delays halted construction for the $3.5 billion project.
Baha Mar fails to open
The $3.5 billion hotel and casino project in Nassau was set to become the most expensive project ever in the Caribbean, with four hotels, a Jack Nicklaus golf course and 40 restaurants. However, the resort repeatedly missed its grand opening deadlines starting from December 2014 to March 2015, causing the company to announce no further timelines and seek bankruptcy protection.
Baha Mar’s developer, Sarkis Izmirlian, argued in a statement that the reason for the delays was mismanagement on behalf of the contractor, China Construction America. Owned by the Chinese government, China Construction American provided a $2.4 billion loan from the Export-Import Bank of China to fund development of the resort. However, in the statement, Izmirlian pointed to the fact that China Construction America continued to miss deadlines for construction, causing Baha Mar to repeatedly postpone its grand opening. Ultimately the mega-resort was left with a sizeable debt and no source of revenue to continue business operations.
Izmirlian concluded that voluntarily filing for Chapter 11 bankruptcy protection was the only option left for the company to create a viable capital structure and complete construction to open the resort.
The problematic development process
Aside from the construction delays racking up debt, there were political issues that caused serious damage to operations. China Construction America shipped hundreds of Chinese workers to the Bahamas rather than employ local Bahaman residents. This situation was exacerbated by the fact that two workers died on site within the last year.
The Chapter 11 case
Baha Mar made the Chapter 11 bankruptcy filing in the U.S. Bankruptcy Court in Delaware, and intends to file an application in the Bahamian Supreme Court after approval of U.S. court orders. Currently, Izmirlian is raising funds for the Debtor-in-Possession financing facility of up to $80 million, with $30 million used by the company to fund operations for the next 30 days. With the cash expected to fund daily operations, Baha Mar will be able to finish construction, which is 97 percent complete, according to court documents.
Izmirlian stated that following the voluntary Chapter 11 filing, Baha Mar will be moving forward because he views the project as a major economic driver for the Caribbean.
Are you a creditor in a bankruptcy? Have you been sued by a bankrupt? If you have any questions about your rights, please contact me, Joel Glucksman, at 201-806-3364.
- Practices: Bankruptcy & Creditors' Rights
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Baha Mar Filing for Chapter 11 Bankruptcy Protection
Author: Joel R. Glucksman
Baha Mar, Ltd, the new 1,000 acre mega-resort in the Bahamas, recently announced that it will voluntarily file for Chapter 11 bankruptcy protection. The announcement of Baha Mar filing for Chapter 11 came after a series of delays halted construction for the $3.5 billion project.
Baha Mar fails to open
The $3.5 billion hotel and casino project in Nassau was set to become the most expensive project ever in the Caribbean, with four hotels, a Jack Nicklaus golf course and 40 restaurants. However, the resort repeatedly missed its grand opening deadlines starting from December 2014 to March 2015, causing the company to announce no further timelines and seek bankruptcy protection.
Baha Mar’s developer, Sarkis Izmirlian, argued in a statement that the reason for the delays was mismanagement on behalf of the contractor, China Construction America. Owned by the Chinese government, China Construction American provided a $2.4 billion loan from the Export-Import Bank of China to fund development of the resort. However, in the statement, Izmirlian pointed to the fact that China Construction America continued to miss deadlines for construction, causing Baha Mar to repeatedly postpone its grand opening. Ultimately the mega-resort was left with a sizeable debt and no source of revenue to continue business operations.
Izmirlian concluded that voluntarily filing for Chapter 11 bankruptcy protection was the only option left for the company to create a viable capital structure and complete construction to open the resort.
The problematic development process
Aside from the construction delays racking up debt, there were political issues that caused serious damage to operations. China Construction America shipped hundreds of Chinese workers to the Bahamas rather than employ local Bahaman residents. This situation was exacerbated by the fact that two workers died on site within the last year.
The Chapter 11 case
Baha Mar made the Chapter 11 bankruptcy filing in the U.S. Bankruptcy Court in Delaware, and intends to file an application in the Bahamian Supreme Court after approval of U.S. court orders. Currently, Izmirlian is raising funds for the Debtor-in-Possession financing facility of up to $80 million, with $30 million used by the company to fund operations for the next 30 days. With the cash expected to fund daily operations, Baha Mar will be able to finish construction, which is 97 percent complete, according to court documents.
Izmirlian stated that following the voluntary Chapter 11 filing, Baha Mar will be moving forward because he views the project as a major economic driver for the Caribbean.
Are you a creditor in a bankruptcy? Have you been sued by a bankrupt? If you have any questions about your rights, please contact me, Joel Glucksman, at 201-806-3364.