The troubled Baha Mar casino resort in the Bahamas has been given a two-month window in which to get its financial house in order.
Late last week, the Bahamas Supreme Court ruled that it would not hear the government’s ‘winding down’ petition until November 2, giving developers Baha Mar Ltd two months to arrange the necessary financing to complete the $3.5b project.
In June, Baha Mar Ltd filed for Chapter 11 bankruptcy protection in Delaware after failing to resolve disputes with its contractor and primary lender, both of which are Chinese state-owned firms. The Bahamian government then sought legal clearance to take control of the project, which it deemed “a matter of the utmost national importance” given the number of jobs at stake if the project were to go tits-up.
The Bahamian court also appointed accountants from Bahamian firm KRyS Global and the UK’s AlixPartners Services to serve as provisional liquidators of the project, although the scope of the authority these liquidators will have is a hotly disputed matter.
Baha Mar Ltd is under the impression that its present management will not be displaced and that the liquidators will work alongside management to preserve the project’s assets. The Bahamian government believes the Izmirlian family that owns Baha Mar Ltd has ceded all financial authority over the project to the liquidators.
China Construction America (CCA), the contractor that stopped work on the project because it claimed it hadn’t been paid by the developer in months, welcomed the appointment of the liquidator while insisting that the developer had been “unwilling to reach an agreement” with CCA and the Export Import Bank of China (EXIM) that would allow work to resume.
Meanwhile, Baha Mar Ltd has applied to the Delaware bankruptcy court to appoint Robert Kors as its chief restructuring officer. Kors, who claims to have “extensive knowledge” of bankruptcy proceedings as well as the hotel and gaming industries, will be paid $725 per hour, plus a non-refundable $10k engagement fee, “additional or bonus compensation” once his work is done, and Baha Mar will cover all his out-of-pocket expenses.
Kors is to be paid out of a “segregated trust account” but the Bahamian government insists that this overly generous approach to finances is exactly the kind of nonsense that the liquidators are intended to prevent. The Bahamian government has argued that it is under no obligation to recognize the Delaware court’s jurisdiction over the project.
Baha Mar is believed to be around 97% complete but EXIM, having already provided $2.5b to the project and having serious doubts in Baha Mar Ltd’s abilities, has refused to provide the extra $400m or so the developer claims is needed to see the project through to completion. It doesn’t help that Baha Mar Ltd’s restructuring proposal envisions scrapping the entire $72m CCA claims to be owed.
