The troubled Baha Mar resort casino project grew more troubled on Friday as over two thousand employees received layoff notices.
Effective Friday, the Supreme Court of the Bahamas approved a request by Baha Mar’s provisional liquidators to issue redundancy notices to approximately 580 active employees and 1,440 non-active employees.
The active employees include management and line staff of the stalled $3.5b resort, which remains unfinished after work ceased at the end of June due to disputes between the developer, financial backers and the main contractor.
Alistair Beveridge, a member of the liquidation team, said the staff had been kept on as long as possible given the limited funds made available to the liquidators by the Bahamian government. But the resort had been “paying housekeeping staff when there was no housekeeping to do, spa staff when there was no spa, casino staff when there was no casino to operate.”
Developer Baha Mar Ltd, which is run by Sarkis Izmirlian, filed for Chapter 11 bankruptcy protection in June, claiming that the primary contractor, China Construction America (CCA), had failed to meet specified timelines. CCA, a state-owned Chinese firm, has accused Baha Mar Ltd of failing to pay its bills, while the Export-Import Bank of China (EXIM), the project’s principal backer, has declined to give Baha Mar Ltd the additional funds it says are necessary to complete and open the resort.
Prime Minister Perry Christie issued a statement saying he was “disappointed” by the layoffs. In July, Christie’s government filed a ‘winding-up’ petition to wrest control of the project from the developer. The petition has a deadline of Nov. 2 but the government had apparently hoped the squabbling parties could reach some consensus long before that date. The layoffs are being taken as a strong indicator that the prospects for a deal remain elusive.
The failure to reach a deal could have far-reaching consequences, as investors services have previously suggested that a swift resolution to the Baha Mar debacle was key to the Bahamas maintaining its investment grade rating. Opposition deputy leader K.P. Turnquest told the Bahamas Tribune that Baha Mar’s problems had “country risk, reputational risk attached to it. This thing could end up being a very serious blow to the economy.”