By Neil Hartnell

Tribune Business Editor

nhartnell@tribunemedia.net

Baha Mar’s main contractor last night confirmed the deal struck with Sarkis Izmirlian to resolve their decade-long legal battle will see it retain ownership of two downtown Nassau hotels.

China Construction America (CCA) and its two Bahamian affiliates, in a statement received just before Tribune Business went to press, said the settlement - which now must be approved by the New Jersey federal bankruptcy court - ends the threat posed by Baha Mar’s original developer attempting to wind-up the company that holds the British Colonial and Margaritaville Beach Resort.

Affirming that Mr Izmirlian’s winding-up petition, which was due to be heard by the Supreme Court in less than two weeks’ time on December 9-11, is among the legal actions that will cease as a result of the settlement, CCA said this paves the way for it to retain ownership of both resort properties.

Referring to Mr Izmirlian’s BML Properties vehicle, CCA said: “In accordance with the agreement, BML Properties is dropping all claims in the US and The Bahamas against CCA, CCA Bahamas and CSCEC Bahamas and their respective affiliates without any admission of liability on their part.

“The agreement is subject to approval by the US Bankruptcy Court in New Jersey, which CCA hopes to obtain in the coming days. CCA Bahamas will retain its ownership interest in the British Colonial and Margaritaville Beach Resort hotels, which the company believes will benefit the entire Bahamian community well into the future.” CSCEC stands for China State Construction and Engineering Corporation, which is CCA’s parent.

The two Bahamas-domiciled entities, as well as CCA’s US arm, were the three defendants potentially liable to pay Mr Izmirlian some $1.8bn after he won his ‘fraud’ and ‘breach of contract’ claim against them in the New York State Supreme Court over the failure to complete the Baha Mar development on budget and on time. 

“We are pleased to have successfully resolved this matter and to move forward with clarity and certainty for our employees, customers and partners,” said Yan Wei, CCA’s chairman and chief executive, in a statement.

“While we remain convinced by the strength of our legal arguments, bringing this matter to a close is in the best interests of our stakeholders and will allow us to focus fully on our strategy for delivering world class construction projects and hospitality operations to our customers.

“We thank our team and partners for their continued support, and look forward to many opportunities together. We also want to extend our appreciation to the people and businesses of The Bahamas for their continued friendship and trust as we look to deepen our relationships in the country.”

Mr Izmirlian had previously reassured staff at downtown Nassau’s British Colonial and Margaritaville Beach Resort properties that their livelihoods would be safe even if he succeeded in persuading the Bahamian Supreme Court to appoint liquidators for their parent company, CCA Bahamas.

Legal documents obtained by Tribune Business confirmed that Mr Izmirlian and his BML Properties vehicle had petitioned for KPMG to be approved as court-appointed liquidators for CCA Bahamas.

The original Baha Mar developer had moved against both companies in a bid to seize and secure control of the two Bahamian hotels on the basis that they represented the most valuable assets owned by the three CCA subsidiaries that were ordered by the New York State Supreme Court to pay him $1.642bn in damages - a sum that rose to $1.8bn given the 9 percent interest that was accumulating daily on the judgment sum.

The two Bahamian resorts were said to have been valued at a combined $355.1m - less than one-fifth of his New York damages award. However, he emphasised that his actions will not impact the hundreds of employees working at the British Colonial and Margaritaville Beach Resort regardless of the outcome.

“We are seeking the protection of court-appointed guardians [KPMG] to ensure the continued stable operation of the hotels and preserve Bahamian jobs,” said Mr Izmirlian.

Whitney Thier, executive vice-president, general counsel and secretary for BML Properties, the corporate vehicle owned by Mr Izmirlian, cited the alleged insolvency of both CCA (Bahamas) and CSCEC (Bahamas) as the basis for the winding-up petition’s filing given previous admissions that they lacked the cash and other assets to settle the $1.642bn New York judgment.

“To-date, the company has failed and/or refused to pay or satisfy any part of the New York judgment debt which remains fully enforceable as against it,” Ms Thier said of CCA (Bahamas), “or to make any offer to the petitioner to secure or compound the same.

“In the premises, the company is insolvent within the meaning if section 186 (c) of the Companies Act chapter 308 as it is unable to pay the New York judgment debt that is overdue and/or the value of the New York judgment debt exceeds the company’s assets. Accordingly, the company should be wound-up by the honourable court.

“The company has stated that it is unable to pay the New York judgment, a debt now due, and that its value exceeds the value of the company’s assets.” CCA (Bahamas), according to a corporate chart released by the contractor itself, is the immediate parent for Neworld One Bay Street Ltd and Strategic Property Holding Ltd, which hold the British Colonial and Margaritaville Beach Resort respectively.

Genguo Ju, CCA (Bahamas) executive vice-president, admitted in a November 1, 2024, affidavit that the combined value of the two Bahamian resorts is “a mere fraction” of the damages award. He asserted in an affidavit that the shares giving CCA ownership of both resorts were valued at $146m in the company’s most recent audited financial statements. And an appraisal conducted earlier in 2024 had priced the combined real estate worth of the two properties at between $232.7m and $355.1m.