By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Baha Mar's contractor is fighting Sarkis Izmirlian's attempt to use a report filed with the New Jersey bankruptcy court in his Bahamian legal bid to wind-up its two Nassau-based resorts.

China State Construction and Engineering (CSCEC) Holding Company, the parent entity for China Construction America (CCA Inc), is arguing that the report compiled by the latter's "special" Chapter 11 bankruptcy committee contains "confidential commercial information" that Baha Mar's original developer must be prohibited from using in his ongoing Supreme Court fight.

However, Mr Izmirlian and his BML Properties vehicle, which are battling to collect $1.7bn in damages awarded against the three CCA affiliates found guilty of fraud and breach of contract that ultimately cost the original developer control of the Cable Beach mega resort project, are asserting that they should be allowed to use the report's contents "in litigation in The Bahamas".

An October 6, 2025, letter to Christine Gravelle, the New Jersey judge overseeing CCA Inc's Chapter 11 bankruptcy, discloses that both CCA (Bahamas) and CSCEC (Bahamas) are resisting Mr Izmirlian's attempts to have them wound-up by the Supreme Court on the basis they are insolvent. The former is the immediate parent for CCA’s Bahamian resorts, the British Colonial and Margaritaville Beach Resort.

The letter, which has been obtained by Tribune Business, comes just three days ahead of today's New Jersey bankruptcy court hearing on Mr Izmirlian's bid to 'pierce the corporate veil' and directly target CSCEC Holding Company through fresh litigation in a bid to collect on his $1.7bn judgment from CCA's parent.

E-mails seen by this newspaper show that attorneys acting for Mr Izmirlian and BML Properties have urged CCA Inc's "special committee", formed from the Chinese state-owned contractor's independent non-executive directors, to "make a ten-figure settlement demand on CSCEC Holdings now".

They assert that Baha Mar's original developer "firmly believes that the best path forward is to confront CSCEC Holdings, not kowtow to it through a [Chapter 11 emergence] plan designed to benefit insiders to the detriment of non-insiders".

The e-mails reveal that Mr Izmirlian and his legal advisers have been emboldened by the contents of the very same report that Baha Mar's original developer now wants to employ in his battle to wind-up both CCA's Nassau resorts. CCA Inc's "special committee" found "there are colorable estate claims against CSCEC Holdings, including one for alter ego, to hold [it] liable for the entire $1.7bn judgment".

So-called "colorable claims" refer to legal claims that would support creditor recovery efforts, including litigation, should the necessary proof and evidence be provided. And the "special committee" report, which has been filed with the New Jersey Bankruptcy Court, details several potential claims - including that $125m worth of loans from CSCEC Holdings to CCA should be reclassified as equity injections.

It conceded, though, that it was "a close call" as to whether this argument would prevail in a US court along with suggestions that the $125m should rank below other claims in the creditors' queue. However, the "special committee" probe "uncovered evidence that suggests that four of the seven factors could support a finding that CSCEC Holdings and [CCA Inc] were a single economic entity".

This is potentially significant evidence to support Mr Izmirlian's winding-up bid before the Supreme Court. The "special committee" report agreed it could be argued that CCA Inc, the Chinese contractor's US affiliate and one of the three entities held liable for the $1.7bn damages payout, was "under-capitalised" and also "presumed insolvent" between 2021 and 2024.

"Certain facts can support an argument that the debtor [CCA Inc] is a façade of CSCEC Holdings including, for example, that CCA did not have its own projects, generated minimal revenue and relied on CSCEC Holdings for funding to operate. CCA shared offices with CSCEC Holdings, and CCA and CSCEC Holdings shared management," the special committee report added.

"For the foregoing reasons, a court may also conclude that there is a showing of injustice and unfairness that justifies imposition of alter ego liability on CSCEC Holdings even absent evidence that the debtor was a sham or otherwise was a component in a 'shell game'.

"[But] notwithstanding the foregoing, there are significant counter-arguments and evidence to the above points that could pose considerable hurdles to the viability of a veil-piercing claim." The "special committee" report also referred to the possibility of a legal claim that certain payments "were improper", although the details were blanked out.

"There is a colorable claim for the debtor’s estate to pierce the corporate veil and impose liability on CSCEC Holdings," the report concluded. "But, even if an alter ego claim could be adequately pleaded, the cost and length of time necessary to litigate such a fact-intensive claim, the reluctance of courts applying Delaware law to sustain veil-piercing claims, and the numerous facts that weigh against veil piercing lend serious doubt to the ultimate viability of such a claim."

These conclusions, though, were seized upon by Mr Izmirlian's attorneys. Brett Thiesen, vice-chair of the financial restructuring and creditors rights' group at the Gibbons law firm, told the "special committee's" counsel via a series of e-mails between August 8-10: "We requested that the special committee make a ten‐figure settlement demand on CSCEC Holdings now.

"The logic of this is obvious – it would massively benefit the estate to resolve its biggest liability and give CSCEC Holdings a path to continue to control the debtor. Since the report concludes that there are colorable claims for estate alter ego claims, why not make the demand?.... The report unambiguously states that the claims are colorable.

"We remind you the estate owes its creditors fiduciary duties. The largest creditor [Mr Izmirlian], holding more than 99.99 percent of non‐insider claims, firmly believes that the best path forward is to confront CSCEC Holdings, not kowtow to it through a plan that is designed to benefit insiders to the detriment of non‐insiders," he added.

"And now the special committee itself has recognised that there are colorable estate claims against CSCEC Holdings, including one for alter ego to hold CSCEC Holdings liable for the entire $1.7bn judgment.

"One would think the special committee would want to work arm in arm with us to see CSCEC Holdings be convinced to fund ten figures to resolve these claims. But all we have heard is a 'toggle' plan that gives CSCEC Holdings the inside track to buy releases on the cheap."

However, the "special committee" and its attorneys countered that the issue of whether there are viable claims against CSCEC Holdings is not so simple. Natasha Labovitz, an attorney with Debevoise & Plimpton, argued that "most if not all of the colorable claims... have limited or questionable viability".

She added that CCA's plan to emerge from Chapter 11 bankruptcy protection "contemplates a transaction under which a plan sponsor, whether CSCEC Holdings or some other purchaser, would acquire all of CCA’s assets for value".

And Elizabeth Adams, the sole "special committee" member, argued that "constructive engagement" with CCA Inc's parent was the best way to maximise recoveries for the latter's creditors including Mr Izmirlian. 

She added: "The special committee has not ruled out potential future litigation against CSCEC Holdings. I do not believe any of the steps taken by the special committee would preclude the special committee from pursuing litigation against CSCEC Holdings at the appropriate time if, in my reasoned judgment, the special committee should determine that doing so would be the best way to maximise value for the estate.

"Nonetheless, I believe that initiating litigation against CSCEC Holdings would be premature at this time and may not ultimately be necessary given the ongoing efforts to pursue a consensual resolution that could deliver meaningful value to the estate without the costs and delays of litigation."

As for Mr Izmirlian's bid to initiate his own litigation, Ms Adams added: "In my judgment, permitting BML Properties to pursue a veil-piercing claim against CSCEC Holdings at this time would be prejudicial to the efforts being taken by the special committee....

"Allowing BML Properties to proceed separately would divert the attention of CCA, BML Properties, CSCEC Holdings and their respective professionals away from global discussions that are already underway, which would likely delay, if not impede, the parties’ ability to reach a consensual resolution and hinder, rather than advance, progress toward a value-maximising outcome in this Chapter 11 case."

As for Mr Izmirlian's bid to use the special committee's report in his Bahamian winding-up bid, CSCEC Holdings' attorneys argued that the New Jersey bankruptcy court should block this because it "might be misused in other proceedings".

"BML Properties has made clear that it intends to use this confidential information about CSCEC Holdings and its subsidiaries in connection with its litigation in The Bahamas; it should not be permitted to do so," they argued. "Here, CSCEC Holdings is not party to the proceeding in The Bahamas and therefore has no way of knowing whether its interests would be 'fully and ethically prosecuted'."

However, Mr Izmirlian argued that he should be allowed to use the report's contents in accordance with the New Jersey Bankruptcy Court order governing how confidential information is to be used and protected. 

"Among other proceedings in The Bahamas, the debtor’s affiliates are opposing BML Properties' applications to wind-up CCA Bahamas and CSCEC Bahamas on the basis of their insolvency, and the information in the special committee’s report... will be relevant to those proceedings," it was argued.

"This information should not be kept from judges of other courts, particularly in The Bahamas where BML Properties can seek permission to limit public access to the information. BML Properties' use of discovery in The Bahamas should be allowed because discovery should generally be allowed to be used in other collateral proceedings, absent a showing of tangible prejudice to the other party.

"While CSCEC Holdings is not a party to the Bahamian proceedings, its interests will be adequately represented by CCA Bahamas, a wholly-owned subsidiary, and CSCEC Bahamas, a sister affiliate likewise wholly owned by CSCEC Ltd."