by Brian Major
Last updated: 3:54 PM ET, Mon October 26, 2015
The stalled and star-crossed $3.5 billion Baha Mar project reached another unwanted milestone last week when most of its 2,000 workers, who had remained on the unopened mega-resort's payroll despite months of inactivity, were laid off. The project's stakeholders and the Bahamas government now face more peril as a Nov. 2 deadline to commence formal liquidation proceedings looms, with no resolution in sight.
"The government is disappointed in the decision to make Baha Mar employees redundant," said Perry Christie, the Bahamas premier, in a statement last week.
Baha Mar developer Sarkis Izmirlian added, "With Baha Mar still not completed, no concrete resolution in place, no confirmed funding source and without the benefit of binding the parties into a proven reorganization process, there is simply no way to sustain the thousands of jobs," cut Thursday.
About 1,440 non-active and 580 active employees, including both management and staff, were idled. "We were paying housekeeping staff when there was no housekeeping to do, spa staff when there was no spa, casino staff when there was no casino to operate," said Alastair Beveridge of Alix Partners, one of two joint provisional liquidators assigned in September to oversee the shuttered mega-resort.
Workers had previously been paid through government funds originally slated for Baha Mar road construction, he said. Recognizing the liquidators' mandate to preserve the resort's assets, the Bahamas Supreme Court approved the layoffs.
Meanwhile, the country remains "engaged in meetings and other dialogue" with developer Baha Mar Ltd., lender China Export Import Bank (EXIM Bank), and principal contractor and equity partner China State Engineering and Construction Company (CSEC), along with the joint provisional liquidators, to find "the best possible solution which will best serve the national interest," said Christie.
A settlement is viewed at this point as a long shot. The parties have ostensibly been talking since September, when Bahamas Supreme Court Justice Ian Winder approved the government's petition to appoint the provisional liquidators. At no point has a resolution appeared imminent.
It appears increasingly unlikely the sides will reach an agreement prior to Nov. 2, when the Supreme Court will hear a petition to place the key seven companies within the Baha Mar group into full liquidation, a development Christie himself described as "chilling."
Izmirlian has labored for two decades to build what became Baha Mar. But he conceded Thursday that the project's future is uncertain at best. "Whilst there (are) still ongoing conversations with all parties aimed at finding a solution to be able to finish and open Baha Mar, it is very difficult to predict where these will lead us," he said.
He also took a swing at the Bahamas' "winding-up" strategy, which government officials had described as the most efficient route to a speedy completion and opening of the resort. The strategy was launched after Izmirlian failed in his own attempt to have Baha Mar placed into Chapter 11 bankruptcy in the United States.
"Perhaps this would be a moment to ponder the validity of decisions made to oppose Baha Mar's Chapter 11 bankruptcy filing in a United States court and to push forward with the appointment of provisional liquidators, setting Baha Mar on its current path," the developer said Thursday.
He did not mention that the Chapter 11 plan hinged on millions in additional funding for which no source was evident, a strategy the judge in that case called "aspirational."
Meanwhile, the provisional liquidators, limited in their ability to prevent the depletion of the $3.5 billion resort's assets, have not announced a plan for opening and operating Baha Mar should the present stakeholders fail to reach an agreement.
The layoffs "further highlight the urgency for everyone to remain at the negotiating table and maintain the dialogue that may lead to a resolution, a re-start of construction and the completion of the Baha Mar project," said Edmund Rahming, global managing director at KRyS, one of the two liquidators.
A Tribune Business report says the joint provisional liquidators have raised only $9 million of the $25 million in financing they had sought to cover costs incurred during their appointment.
In addition, while EXIM Bank has forwarded more than $9 million to cover Baha Mar's property insurance premiums, the remaining $16 million balance has not been secured. The report says 350 Baha Mar employees remain on-staff, working to help preserve the resort's properties.
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