July 22 (Reuters) - A judge in the Bahamas has declined to recognize the U.S. bankruptcy filing by Baha Mar Ltd, the developer of a $3.5 billion mega resort, a source familiar with the ruling said on Wednesday.
Recognition of the Chapter 11 U.S. bankruptcy filing would have prevented creditors from taking action against Baha Mar Ltd in the Bahamas. The decision by Supreme Court Justice Ian Winder was the latest snag in the nearly completed project, which is considered vital for the Caribbean country’s fragile economy.
Baha Mar said in a statement it was disappointed by the ruling. “We do not believe today’s ruling, for which the government strenuously argued, assures the necessary protection of the assets of Baha Mar, and we do not believe that it is best for the over 2,500 current employees of Baha Mar.”
Work has been halted as the local developer, Sarkis Izmirlian, and contractor China Construction America (CCA), a unit of China State Construction Engineering Corp Ltd , have traded blame for missing two completion deadlines.
CCA has asked the U.S. Bankruptcy Court in Wilmington, Delaware to dismiss the Chapter 11.
The Izmirlian family has invested more than $900 million in the project.
Baha Mar Ltd is trying to renegotiate with China’s export import bank, which bankrolled most of the project with a $2.45 billion loan.
The Bahamian government has asked a local court to appoint liquidators for Baha Mar, which is 97 percent complete and will feature a Las Vegas-style casino and more than 2,000 hotel rooms. Prime Minister Perry Christie called completion of the project a matter of national importance and has said it could be finished more quickly through a liquidation process in the Bahamas.
A completed resort would employ more than 5,000 people in the Bahamas, where the unemployment rate is 16 percent, and boost its gross domestic product by about 12 percent, according to estimates from the government and Baha Mar Ltd. (Reporting by Tom Hals in Wilmington, Delaware; Editing by David Gregorio)