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Baha Mar Hearing Delayed, Frustrating Efforts to Pay Employees
Resort developer says staff may need to be cut
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| Construction of the Baha Mar resort on the beach on New Providence island, Bahamas, July 2014. |
By Stephanie Gleason
A legal proceeding in the Bahamas to recognize Baha Mar Ltd.’s U.S. bankruptcy case has been delayed until next week, an action the resort developer says could cause it to have to substantially reduce its staff.The adjournment of the hearing was at the request of the Attorney General of The Bahamas and The Export-Import Bank of China, which lent the project $2.4 billion, Baha Mar said in a news release Thursday. The move by the yet-to-be-completed resort’s lenders—a Chinese-government-owned bank—is the first time the bank has flexed its muscles during Baha Mar’s short bankruptcy proceeding.
“If we are frustrated in taking advantage in The Bahamas of the U.S. chapter 11 process for very much longer, drastic and regrettable steps, including substantial staff reductions, will have to be taken,” Baha Mar said in the release.
The resort won a number of approvals from the U.S. Bankruptcy Court in Wilmington, Del., Wednesday, during a hearing that was uncontested. However, the company can’t implement them until the government in the Bahamas recognizes the U.S. proceeding.
The most immediate of these approvals relate to employee wages and critical vendors. Although Baha Mar was authorized in the U.S. to pay $4.5 million in employee wages and benefits, the company now can’t make those payments. The company also can’t make payments to critical vendors, including those that could end service to the company as a result.
Instead, the attorney general asked for information of the 2,200 employees and said the government will process the payroll itself. Baha Mar said it is complying with this “unorthodox” request.
Neither the Bahamian attorney general nor the Export-Import Bank of China could be reached for comment Thursday.
Baha Mar Ltd. filed for bankruptcy earlier this week, saying construction delays caused it to miss an April opening deadline.
The resort is of great importance to the Bahamas, employing 1.5% of the island nation’s population and is responsible for 12% of the nation’s gross domestic product, according to Baha Mar’s bankruptcy attorney. He said the project is 97% completed, with all structures finished, but it still requires inspections and other final tasks to be finished before opening to the public.
Upon completion the project is projected to have 2,200 rooms in four hotels, which include the Hyatt, Rosewood and SLS brands. The site will also include luxury condominiums, an 18-hole golf course, a 100,000-square-foot casino and a nightclub designed by singer Lenny Kravitz.
