July 7, 2015 / 3:22 PM / 3 years ago

UPDATE 3-Chinese firm blames bankruptcy of Bahamas resort on developer

(Adds comment from developer)

By Tim McLaughlin

July 7 (Reuters) - The Chinese construction company building the unfinished $3.5 billion Baha Mar resort in the Bahamas on Tuesday accused the developer of mismanaging the project’s design and not securing adequate financing.

China Construction America (CCA) has been blamed for the delays that caused the Baha Mar project to file for bankruptcy protection late last month in a Delaware court.

But CCA said the developer of the project replaced the mega resort’s principal architect after construction began and had more than 1,300 change orders for construction contractors. Developer Baha Mar Ltd is run by Sarkis Izmirlian, the son of an Armenian billionaire.

Construction delays, funding squabbles, lagging inspections and faulty work at the Nassau resort have led to finger pointing among Izmirlian, CCA and China’s export finance bank, which bankrolled most of the project with a $2.45 billion loan.

Baha Mar Ltd called CCA’s statement an “attempt at damage control” and declined further comment, according to a spokeswoman for the developer.

Meanwhile, the turmoil over Baha Mar has roiled the Caribbean nation’s fragile economy, aggravated would-be tourists and idled thousands of workers amid already high Bahamian unemployment and slack revenue growth.

“Baha Mar Ltd’s decision to file for bankruptcy protection is the direct result of its failure to secure adequate financing and its mismanagement of the design of Baha Mar resort project,” China Construction America said in its first public statement since Baha Mar’s bankruptcy filing.

CCA is a unit of China State Construction Engineering Corp Ltd and Baha Mar’s general contractor.

Izmirlian and Baha Mar Ltd have accused the Chinese construction firm of falling behind schedule and causing the project to go into bankruptcy, according to U.S. court filings. CCA said those claims are “insulting.”

CCA said it has hired Island Capital Group, led by Andrew Farkas, as its restructuring and financial adviser. Farkas formerly was chief executive officer of Insignia Financial Group, which he merged with CB Richard Ellis in 2003 to form one of the largest commercial real estate services companies in the world.

Baha Mar Ltd recently told a bankruptcy judge the project is 97 percent complete. Work has been stalled for weeks and there is no timeline for construction to resume.

Baha Mar was originally scheduled to open in December. That deadline was missed, as was an end-of-March deadline. The second delay proved “devastating” to Baha Mar Ltd, which had hired more than 2,000 hotel and casino workers to staff the opening, the developer said in its court filing. (Reporting by Tim McLaughlin in Boston; Editing by Alan Crosby and Lisa Shumaker)

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