The three US-based subsidiaries of Chinese state-owned construction giant China State Construction Engineering recently found liable to pay US$1.6 billion in damages to the original developer of Bahamas integrated resort Baha Mar have filed a reply affirmation in support of their request for a stay of enforcement while they carry out an appeal against what they describe as the trial court’s “wrongful decision”.
The entities, part of China Construction America (CCA), were last month found by a New York trial court to have engaged in “many acts of fraud” in relation to Baha Mar and ordered to pay BML Properties US$1.6 billion, comprising the latter’s entire US$845 million investment plus interest dating back to May 2014.
BML Properties, which filed for bankruptcy in June 2015 after Baha Mar missed a series of opening deadlines, had accused CCA of deliberate poor craftmanship. The project was at the time handed over to a liquidator before the Bahamian government announced it had reached a deal with CCA to resume construction while it looked for a buyer, later revealed to be Hong Kong jewelry giant Chow Tai Fook Enterprises.
The reply affirmation, filed with the Supreme Court of New York on Monday and viewed by Inside Asian Gaming, seeks to maintain the status quo while the court reviews the trial court’s post-trial decision and judgment.
In the motion, the defendants describe the trial court as having “piled error on error in awarding [BML Properties] $1.6 billion in damages and prejudgment interest,” claiming it “ignored swaths of unrebutted testimony and entire defense witnesses, mixed and matched contractual obligations without importing the attendant limitations on liability, and misapplied the same bedrock damages principles that this Court corrected the trial judge on in this same case at summary judgment less than a year ago.”
The motion also notes that, should BML Properties be allowed to immediately begin enforcement proceedings, the defendants will be forced into insolvency due to their collective worth being a fraction of the judgement.
They have, however, agreed to secure a stay on the conditions BML Properties has proposed, including that CCA Bahamas pledge its shares of subsidiaries that own two hotels in Nassau, Bahamas, which represent nearly all the total combined value of the three defendants, according to information provided to IAG.
A spokesperson for the defendants said, “Our decision to provide this security not only underscores our confidence that we will prevail on appeal but also fully meets the conditions BML Properties itself proposed to the appeals court for a stay of enforcement of the trial court’s fatally flawed decision. Given that the security we have offered the Court is consistent with BML Properties’ proposal, BML Properties should inform the Court that it agrees to a stay and allow the judicial process to take its course.
“As we have said previously, BML Properties brought about its own failures through its gross mismanagement of the Baha Mar project and the trial court piled error on error in finding otherwise. The actions we have now taken are in the best interests of all our stakeholders and, importantly, will have no impact on our operations as we pursue our appeal or on the operation of the British Colonial and Margaritaville Beach Resort hotels and their guests, employees and vendors.”
CCA’s appeal claims that BML Properties was responsible for its own downfall by overborrowing, overspending and overextending itself and “secretly putting the project into a wrongful bankruptcy behind the backs of its partners and the Bahamian Government.”
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