Baha Mar developer: Nassau hotels will serve as security in billion-dollar court case

A US judge has ordered China Construction America (CCA) to pay $1.6 billion in damages for defrauding developer Sarkis Izmirlian. Izmirlian wants two Nassau hotels as security.

Last month, New York State Supreme Court Judge Andrew Borrok ruled that CCA defrauded Izmirlian, misleading him about development timelines. He agreed that the contractor misappropriated construction funds and ultimately forced BML Properties (BMLP) into Chapter 11 bankruptcy.

Borrok awarded the Swiss developer $1.6 billion (£1.2 billion/€1.5 billion) in damages and interest.

CCA has filed an appeal. It claims the decision “misapplies basic principles of New York law, misconstrues core facts and completely overlooks the consistently tireless construction work … that ultimately completed Baha Mar.”

In addition, the contractor sought an emergency stay of the judgment, saying its solvency was at stake. It won the stay on 5 November, reported the Nassau Guardian.

Izmirlian claimed history of deception

In 2011, Izmirlian’s company retained CCA to build the beachfront resort, scheduled to open in 2015. But in 2014, he claims, CCA began to deliberately mislead him about its ability to complete the project on time. In June 2015, BMLP filed for bankruptcy.

In his 19 October decision, Borrok called CCA’s actions an “absolute sham and shakedown” of Izmirlian. He said CCA repeatedly breached its best-interest agreement, committed multiple acts of fraud, and engaged in “outright sabotage” of the project.

In 2017, Hong Kong conglomerate Chow Tai Fook Enterprises bought the resort complex, and continues to own and operate it.

CCA: Izmirlian engineered his own downfall

CCA counters that BML Properties “brought about its own losses.”

In an email to Global Construction Review, a representative wrote, “Through its own irresponsible actions, BML Properties caused BML to overborrow, overspend and overextend itself. It unilaterally and secretly (put) the project into a wrongful bankruptcy behind the backs of its partners and the Bahamian government.”

CCA further alleges that BMLP not only harmed the contractor, “but also the Bahamian economy. We look forward to presenting our arguments to the appellate court.”

Izmirlian seeks CCA-owned two hotels as security

Izmirlian fired back on 13 November. He asked that two CCA-owned hotels, the British Colonial and Margaritaville Beach Resort in Nassau, be held as security against the verdict.

According to the Nassau Tribune, Izmirlian dismissed CCA’s insolvency fears as “speculative.”

“CCA undoubtedly has assets” to satisfy the judgment, he said. He added that the contractor “has chosen to withhold documentary evidence of its assets and liabilities in support of its motion.”

CCA is the US arm of China State Construction Engineering Corporation (CSCEC). It served as construction manager for Genting’s Resorts World New York in Jamaica, Queens.

Big expansion in the works

Against all the legal drama, Baha Mar is planning a new resort. The $350 million addition will break ground in 2026 and open in 2029.

Resort president Graeme Davis said the capital investment “underscores Baha Mar’s role as a catalyst for continued economic growth and job creation.” He thanked the government for a “collaborative partnership in bringing this new development to life.”

Bahamas prime minister Philip Davis called Baha Mar “a valued partner, consistently delivering transformative projects that boost tourism and economic development” in the island nation.