‘Baha Mar should rethink removing contractor’

Wednesday, September 2, 2015

By KHRISNA VIRGIL

Tribune Staff Reporter

kvirgil@tribunemedia.net

BAHA Mar developer Sarkis Izmirlian should rethink his proposed plan to remove China Construction America (CCA) as the general contractor for the mega resort, a prominent analyst has suggested.

Gowon Bowe, partner at PricewaterhouseCoopers, said with the West Bay Street project around 97 per cent complete, it was important for resort executives to weigh the implications of contracting a new firm.

Mr Bowe, who is also chairman of the Bahamas Chamber of Commerce and Employers Confederation (BCCEC), said a new firm would most likely create further delay where such circumstances need not exist.

In court documents filed last week, it was revealed that Baha Mar’s proposed bankruptcy reorganisation calls for the rejection of its construction contract and all other claims with CCA and its parent company China State Construction Engineering Corporation (CSCEC), in a bid to restructure the stalled mega-resort.

Mr Bowe said: “It’s best to get Baha Mar opened and fight whatever battle that needs to be fought in the courts after the fact. Otherwise it is not benefiting the economy. If the resort is now 97 per cent complete, a new contractor would need time to get acquainted with all the intricacies of all the systems which are already in place.

“So I am of the position that the existing contractor and Baha Mar should seek, along with the other parties involved, resolution. I would say it is not surprising that Baha Mar has taken this position, but it is one they always held. But when you look at all parties, they all have made mistakes so there is no one that comes with clean hands, but it is more important to reach compromise. Business makes odd bedfellows so when you look at the equity of all parties, tremendous investments were made and they all need to think about how to salvage instead of damage.”

The government first eyed Mr Bowe, along with two other officials from his firm, as the potential liquidators to be appointed by the Supreme Court to oversee the resort.

However, at the end of July, it was revealed in court that CCA contested this move. The government has since approached officials from Ernst and Young (Bahamas) to become the potential liquidators.

The Supreme Court is expected to make a decision on the government’s winding up petition against Baha Mar on September 4.

According to court documents, Baha Mar’s new restructuring plan would negotiate directly with CCA’s sub-contractors to reconcile claims if CCA failed to remit payment, but added that any distributions on account of the claims would be made at the sole discretion of the debtors.

The resort insisted that Bahamian creditors would be paid in the “ordinary course of business” once the Chapter 11 reorganisation plan filed last week in a Delaware court by the resort and its 14 affiliates was implemented.

The plan was described as the best available alternative to allow for the quick resumption and completion of the project’s construction.

According to the court documents, it takes into consideration the value of the $3.5bn Cable Beach project as a long-term business that was tied to the economic welfare of the country.

“Once completed,” the plan read, “the project is projected to generate nearly 5,000 new jobs and have an annual payroll in excess of $130 million, representing 12 per cent of the Gross Domestic Product of the Bahamas.

“Most notably, the plan does not impair the legal or equitable rights of Bahamian creditors or the government of the Bahamas, whose claims will simply ‘ride through’ the Chapter 11 cases.”

It continued: “The debtors submit that timely confirmation of the plan is unequivocally in the best interests of their creditors and estates.”

This is not the first time that the resort has sought to sever ties with its general contractor.

In July, Mr Izmirlian made a $200m proposal to Baha Mar’s Chinese lender to drop CCA and use Bahamian contractors to complete the project.

On June 29, Baha Mar and 14 of its affiliated companies filed for bankruptcy in a Delaware court, blaming CCA for the construction delays that caused it to miss previous opening deadlines.

The resort also took legal action against CCA’s parent company in the English High Court.

Comments

countryfirst says...

Mr. Bowed is also in bed with the Chinese.I don't see why these guys have a problem with Bahamians finishing this project could it be they want it all for themselves typical all for me baby syndrome.

Posted 2 September 2015, 1:51 p.m. Suggest removal

MonkeeDoo says...

countryfirst: Mr. Bowed, as you rightly refer to him, has lost his credibility over VAT. Reminds me of someone swimming through VOMIT !!!

Posted 2 September 2015, 3:25 p.m. Suggest removal

Craig says...

The problem in the country is, it is strongly held that only Doctors, Lawyers and Accountants are the only true professionals. With all due respect to Mr. Bowe but what does he know about construction other than doing the accoiunting work for construction companies. This is probably the biggest problem with this whole wind-up process, i.e. accountants will be put in charge of completing the construction of the resort. A recipe for disaster. Let Baha Mar complete the work. Kick CCA out. They had their chance on several occasions to complete the project. They have shown repeatedly that they are either unable or unwilling or both to complete the project. In regards to Mr. Bowe's point regarding the delays due to having to hire a different contractor, again, he knows nothing about this project. The Bahamian contractors can complete the project. They were on the job when the work stopped. They can complete it. Baha Mar obviously agree. This is the only logical work to get this resort open in the shortest possible time.

Posted 2 September 2015, 3:37 p.m. Suggest removal

DreamerX says...

Just ignore procedural law in these legal cases.

Posted 2 September 2015, 5:07 p.m. Suggest removal

Wideawake says...

Absolutely agree Craig! Not only are the Bahamian sub-contractors familiar with the project, but they probably know better than anyone, exactly what work is sub-standard.

I cannot imagine any clear thinking person believing that Baha Mar could simultaneously work again with CCA, prevail on them to correct and finish work they previously couldn't/wouldn't fix or complete, and at the same time fight them in a court action in the UK where Baha Mar is suing CCA for $200 million!!! Duh!! and Duh again!!!

I do not see what is so UNUSUAL about a non-performing contractor being fired! It happens all the time!!

For anyone who wants to include a mediator/negotiator, I suggest Donald Trump!! He totally understands "The Art of The Deal", has financed and built dozens of huge hotel and casino projects. What a great choice!!

It would only take him 30 mins to negotiate this deal!

Wait for it!! ..... "CCA YOU'RE FIRED"...AND I'M SUING YOUR SORRY CHINESE ASSES FOR $200 MILLION!!!!

Posted 2 September 2015, 8:34 p.m. Suggest removal

LMAO! You are so right.

Posted 2 September 2015, 10:21 p.m. Suggest removal

If CCA had not seen the "conflict" with PwC Mr. Bowe would be laughing all the way to the bank by now. Maybe he's hoping for a comeback. The accountants and lawyers can retire from a single liquidation. Poor Mr. Bowe. He will just have to work hard for his lining ( living ) (Freudian slip ) now.

Posted 2 September 2015, 3:48 p.m. Suggest removal

REALLY Mr. Bowe?.... Still circling the project, are you? ....Looking for a seat at the "winding up feast", along with all the other jackals and hyenas?..... What term is used to describe "ambulance chasers" in the Accounting profession?

Posted 2 September 2015, 8:48 p.m. Suggest removal

truetruebahamian says...

CCA has intentionally short changed Sarkis,and the Bahamas - do you think that they would change their ethic now? They would possibly worsen their behaviour, attitude and work itself just out of spite at having been called out.

Posted 2 September 2015, 4:07 p.m. Suggest removal

Having Bahamians finish this project would be a real boost to the economy because this money will stay in the country.Sarkis already knows the government is not on his side so no contracts for cronies so hardworking Bahamian contractors can get their fair share of the economic pie.Please let's make this happen so tired of this place being run like a banana republic.

Posted 2 September 2015, 5:57 p.m. Suggest removal

Observer says...

What is the scope of the unfinished work? Put it to bid, with a specified date for completion. Then procede from there.

Posted 2 September 2015, 6:38 p.m. Suggest removal

I am sure with the myriad of consultants, architects and engineers that was on that project the scope of work to complete the project can easily be established, and very quickly. They probably have that now and ready to go. All the gov has to do is drop this nonsense they are engaged in and let Baha Mar complete the job

Posted 2 September 2015, 7:08 p.m. Suggest removal

True, true and true!

Posted 2 September 2015, 8:38 p.m. Suggest removal

Well_mudda_take_sic says...

This fella Bowe has the gift of the gab but not an ounce of common sense. The nature of the claims made by Baha Mar against CCA in the High Court in the U.K. are such that Baha Mar would be shooting itself in the foot if it were to agree to CCA continuing on as the general contractor for even one day. Why should Baha Mar walk away from its very legitimate claims for significant losses incurred as a result of, among other things, the sub-standard work of CCA and its other very harmful breaches of its contractual obligations? Where is the business sense behind Bowe's thinking? And to think he considers and promotes himself to be a professional advisor to businesses!

Posted 2 September 2015, 9:25 p.m. Suggest removal

a2z says...

Sounds to me like this fella been hanging roun wit Perry and them for too long?

Posted 2 September 2015, 10:22 p.m. Suggest removal

happyfly says...

Anyone who wants the Chinese to finish this project is anti-Bahamian construction worker and must be collecting money from the Chinese to think that way

Posted 3 September 2015, 6:47 a.m. Suggest removal

In the Tribune letters today Mr. Bowe is put squarely in his place by Edward Hutchinson who adds that he is now duty bound to resign from the Chamber of Commerce or (BCCEC)

Posted 3 September 2015, 10:53 a.m. Suggest removal