BML properties files winding up petitions against CCA in Baha Mar dispute
BML Properties Ltd, the original developer of the Baha Mar resort in the Bahamas, has filed winding-up petitions in the Supreme Court of the Bahamas. These petitions seek the liquidation of three entities linked to its former construction partner, China Construction America (CCA). The entities are CCA Bahamas Ltd, CSCEC Bahamas Ltd, and CCA Construction Inc.
The petitions follow CCA entities’ December filing for bankruptcy protection in the US Bankruptcy Court in New Jersey.
In October, a court ordered CCA to pay BML Properties $1.6 billion, citing “many acts of fraud” during CCA’s takeover of the project in 2015. CCA has since filed counterclaims.
is now operated by Hong Kong-based Chow Tai Fook Enterprises, which has investments in Australia’s Star Entertainment Group, Vietnam’s Hoiana, and Macau’s SJM through chairman Henry Cheng.
Liquidation request
BML Properties wants the court to appoint liquidators from KPMG Bahamas Ltd and KPMG Ireland. These liquidators would manage CCA’s assets, ensure smooth operations, and investigate alleged financial misconduct by the CCA entities.
CCA Bahamas’ assets include the Margaritaville Beach Resort and the British Colonial Hotel. However, BML claims these properties’ combined value is far below the court’s judgment.
Sarkis Izmirlian, chairman of BML Properties Ltd, stated, “We are seeking the protection of court-appointed guardians to ensure the stable operation of the hotels and preserve Bahamian jobs.”
Dispute over CCA’s breach of agreement
The dispute stems from claims that CCA breached an Investors’ Agreement by failing to meet construction deadlines, ultimately causing the project’s collapse. BML alleges that CCA acted to benefit itself and Chinese interests.
During the global financial crisis, BML secured $2.45 billion in funding from China’s Exim Bank, which required CCA to serve as the general contractor and allowed the import of up to 8,000 Chinese workers. BML also contributed $845 million, while CCA invested $150 million.
However, CCA, a subsidiary of the state-owned China State Construction Engineering Corporation, has described itself as “largely illiquid.”
Jacob W. Buchdahl, a leading trial lawyer and BML’s counsel, during a explained his legal strategy, including narrowing the case to focus on fraudulent acts at the critical late stages of the project and contractual breaches that were clearly distinguishable from the fraud allegations.
He also stated that the trial featured crucial evidence from internal communications and expert testimony on damages and financial mismanagement. He added that the judgment is nearly twice BML’s damages because of New York’s high pre-trial interest rates. Despite CCA’s appeal and potential bankruptcy, Jacob remained optimistic about enforcing the judgment and securing justice for his client.
Project delays and bankruptcy
Baha Mar was set to open in December 2014 but missed that deadline and others in 2015. BML filed for bankruptcy in June 2015, blaming CCA for substandard workmanship. At the time, the resort was 97% complete.
Reports also alleged that CCA employees smuggled computers and documents, some indicating poor construction standards, from the project site.
The Bahamian government, which considered Baha Mar a vital national project, rejected BML’s plans to bring in a new contractor. Instead, the project was handed to a liquidator. Construction stalled for over a year before the government struck a deal with CCA to resume work and find a buyer.
Chow Tai Fook’s role
Hong Kong-based Chow Tai Fook eventually acquired the project at an undisclosed price. Reports at the time suggested the purchase was at a substantial discount.
In response to the $1.6 billion judgment, CCA alleges that BML failed to meet its own responsibilities and contributed to the project’s delays, preventing the resort from opening as planned in March 2015.
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