By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Sarkis Izmirlian and Baha Mar’s contractor traded further blows yesterday with the latter asserting the $1.6bn verdict against it “is by no means the last word” as it formally filed notice of its planned appeal.

China Construction America (CCA), in a statement confirming the appeal notice was filed, said the move is a “first step towards correcting” the New York State Supreme Court verdict that ruled it perpetrated “an absolute sham and shakedown” on Baha Mar’s original while providing “phony” completion dates that ultimately cost him his $845m investment in the project.

The Chinese state-owned contractor again defended “the consistently tireless construction work” it performed in a bid to achieve the busted March 27, 2015, completion date, while continuing to blame Mr Izmirlian, his BML Properties vehicle and executive team for mismanaging the development and its budget.

Mr Izmirlian, though, fired back in his own statement last night by branding as “absurd” CCA’s attempts to blame everyone but itself for the missed deadline. He also pointed out that CCA has already failed twice with appeals to the New York State Supreme Court’s appellate division relating to the case.

Nevertheless, CCA pledged to use all efforts to overturn Judge Andrew Borrok’s verdict as it argued that Mr Izmirlian went “behind the backs” of itself, the Christie administration and the China Export-Import Bank, the project’s financier, in seeking Chapter 11 bankruptcy protection in Delaware. It argued that this, and the legal battles, receivership and sales process that followed, delayed completion and hurt the Bahamian economy.

“The lower court’s decision is by no means the last word in this matter, and the action we have taken to begin the appeal process is the first step towards correcting a ruling that misapplies basic principles of New York law, misconstrues core facts, and completely overlooks the consistently tireless construction work done by CCA Bahamas that ultimately completed the Baha Mar resort,” CCA argued yesterday.

“Through its own irresponsible actions, BML Properties caused Baha Mar to over-borrow, overspend and overextend itself and then brought about its own losses by unilaterally and secretly putting the project into a wrongful bankruptcy behind the backs of its partners and the Bahamian Government.

“BML Properties’ ploy to keep control of the project, which was rejected by independent courts in the US and The Bahamas, harmed not only CCA Bahamas and CSCEC Bahamas, but also the Bahamian economy. We look forward to presenting our arguments to the appellate court.”

CSCEC Bahamas is China State Construction and Engineering Corporation, parent of CCA, which saw its $150m investment in Baha Mar via preference shares wiped out as a result of the original project’s liquidation, receivership and ultimate sale to current owner, Chow Tai Fook Enterprises (CTFE).

However, in response to the Chinese contractor’s assertions, Mr Izmirlian blasted back: “CCA’s appeals in this case have failed twice already. CCA’s absurd blaming of others for its own misconduct was already rejected by the trial court. We will continue to pursue justice in this matter.”

CCA’s notice of appeal did not contain the legal grounds and arguments upon which it is seeking to overturn the verdict that awarded Mr Izmirlian the full value of his lost investment plus more than a decade’s worth of pre-judgment interest that will likely equal or exceed his $845m equity contribution to the development.

The Chinese contractor previously claimed that Mr Izmirlian and his team mismanaged the Baha Mar project through constantly changing the design and scope of works, while also frequently supplying drawings and construction plans late. It also accused the original developer of initiating, but failing to pay, construction change directives (CCDs).

However, these arguments were given short shrift by Judge Borrok who comprehensively found for Mr Izmirlian and BML Properties. As for CCA’s Chapter 11 bankruptcy complaints, these filings are typically done very quietly and secretively in a bid to avoid tipping-off creditors to what is afoot.

The Christie administration appeared to view Mr Izmirlian’s actions as a betrayal, given that it had worked on a resolution that would have seen China Export-Import Bank provide a further $150m in financing beyond the original $2.45bn to complete the project. Both CCA and Mr Izmirlian were required to provide an extra $75m each to complete the $300m balance.

This, though, required Mr Izmirlian to give a personal guarantee, which he did not do due to the complete breakdown of trust and confidence in CCA’s ability to complete Baha Mar given that the contractor had not given a completion deadline. Knowing the bank would side with CCA, and likely squeeze him out, the Chapter 11 filing represented a last-ditch bid by Mr Izmirlian to retain control and preserve his investment.

The Delaware Bankruptcy Court also dismissed the Chapter 11 case after realising that any ruling it made would not be recognised by the Bahamian Supreme Court or the Government, ultimately bowing to this nation on jurisdictional grounds as the project and most of its assets were located here.

Judge Borrok, unveiling his findings just over two months after a 14-day trial in early August, found that Mr Izmirlian’s fraud claim against CCA was “established beyond doubt” as the contractor “knowingly and falsely” promised it would meet the revised March 27, 2015, opening date for Baha Mar while concealing from the developer this was unlikely to be achieved.

Judge Borrok’s verdict identified six different contractual breaches by CCA, or violations of the investors’ agreement that governed the relationship between the two sides, while also citing what he described as “at least four instances of fraud” in awarding what Mr Izmirlian and his team said is a total $1.6bn in damages (the $845m plus interest).

The New York judge found that Baha Mar’s financial crisis, which resulted in the liquidity crunch sparking Mr Izmirlian’s ultimately unsuccessful Chapter 11 bankruptcy protection filing in Delaware, would have been avoided if CCA had spent the $54m it demanded in November 2014 on paying the project’s sub-contractors rather than acquiring downtown Nassau’s British Colonial resort.

And he concluded that CCA “ordered or condoned the slowing or stopping” of construction work at Baha Mar in the months leading up to the fatal missed opening in March 2015 to “further its commercial interests”, finding that one of its senior executives admitted to this before then-prime minster Perry Christie.

CCA also “actively worked to curry favour with the Bahamian government” behind Mr Izmirlian’s back, justice Borrok ruled, finding that “the record evidence establishes” it made $2.3m in payments to Notarc Management Group, an entity run by Leslie Bethel, to help “gain access” to his father, Sir Baltron Bethel, who was Mr Christie’s senior policy adviser and ‘point man’ in dealing with the Baha Mar dispute.