Bahamas government moves to get back land from bankrupt developer
Nassau, Bahamas — In the latest developments surrounding the Baha Mar crisis, the Bahamas attorney general has filed a writ seeking to claw back Crown land from the developer of the troubled Cable Beach project.
However, under its agreement with the government, Baha Mar would still have an option to get ownership of the land if it completes the project within three years.
The writ filed by the attorney general states that Baha Mar and the government entered into several agreements in 2005 in connection with the development of a resort complex.
The writ states that all of the agreements contained clauses stipulating that in certain circumstances if Baha Mar failed to complete specified obligations by expressed dates, the government could exercise the right to serve notices on Baha Mar requiring it to re-convey the properties it purchased as part of the deal.
These properties include the Nassau Beach parcel, the Wyndham parcel, the Hobby Horse parcel, the extinguished JFK connector parcel and the old West Bay Street parcels.
“The relevant circumstances have arisen and in particular the defendant (Baha Mar) has failed to fulfill its obligations within the relevant time periods as specified in the agreements,” the writ states.
“Consequently, by respective notices served and dated June 30, 2015, and by tendering and making the appropriate payments (and undertaking the pay pursuant to the formulas specified in the agreement any further sums due), the plaintiff (the government) invoked its right and the defendant’s obligation to re-convey the properties.”
Under the agreement for sale of the land dated April 6, 2005 and signed by prime minister and minister of finance Perry Christie, Baha Mar and the government agreed that if the project was not completed by December 31, 2010, Baha Mar shall re-convey the property to the government.
The agreement stipulates that the government would re-instate the lease previously held by the developer.
Thereafter, the agreement states, the government “shall grant to the purchaser a purchase option” whereby Baha Mar shall have the right to immediately purchase the land if the project is completed within three years from the effective date of the re-conveyance of the land.
Under the agreement, project completion refers to the opening for business of the luxury hotel facilities.
Under the amended agreement Baha Mar entered into with the Ingraham administration, the date for project completion was amended to December 31, 2014.
The date by which the government had to give notice for Baha Mar to re-convey the land in the absence of the project being completed was amended to June 30, 2015, hence the urgency in the government providing notice last week.
One legal source explained that “if this goes on for more than three years, then the Bahamian people’s interest in the property is protected”.
Another source added that if the government failed to take steps by June 30 to have the land re-conveyed, the properties would have been vested in Izmirlian’s companies.
The land re-conveyance issue arises as Baha Mar remains stalled and embroiled in a sticky legal dispute with its contractor.
Last Monday, Baha Mar filed for chapter 11 bankruptcy in the U.S. district of Delaware and warned that it would have to cut jobs if it does not resolve the matter “in the next few weeks”.
A day later, it filed a lawsuit in England against its contractor, China State Construction Engineering Corporation, seeking more than $192 million in damages to compensate for delays and reported substandard work.
The future of the project is uncertain. It is unknown when it will likely be complete, although Baha Mar alleges it is 98 percent complete.
The parties are due back in the Bahamian Supreme Court on Tuesday as Baha Mar seeks to convince Justice Ian Winder to approve orders secured in a US court to tap into a financing facility it says it intends to use to continue paying employee wages, benefits and vendor claims, It also received authorization for severance payments.
Baha Mar’s lawyer Roy Sweeting said in court last Thursday that approval of those orders is “crucial to keeping the lights on at Baha Mar and keeping operations going”.
The government and Baha Mar’s lenders, China Export-Import Bank, have both objected to the orders being approved locally.