The resolutions of the board of directors of Baha Mar Ltd. (BML) - adopted June 29, 2015 - foreshadow the company's contemplation of lawsuits in connection with contracts for the design and construction of Baha Mar, the management of those contracts and the financial guarantees received in connection with some or all of those contracts.

While the company was not named in the bankruptcy filings, China Construction America (CCA) - the partly state-owned Chinese general contractor in charge of construction of the $3.5 billion mega-resort - has come under intense criticism from Baha Mar in recent months. In fact, the company has lashed out at Baha Mar, calling criticisms of its work standards inappropriate. The relationship between the two has deteriorated to such an extent that Prime Minister Perry Christie was obliged to become personally involved in the negotiations once construction stalled on the so-called Cable Beach Riviera.

Indeed, even in the press release issued yesterday, Baha Mar CEO Sarkis Izmirlian said, "The general contractor repeatedly has missed construction deadlines. This has caused both sizeable delay costs and forced the resort to postpone its opening. Unable to open, the resort has been left without a sufficient source of revenue to continue our existing business."

Izmirlian said in the statement yesterday that Baha Mar sought the help of its major lender - the China Ex-Im Bank - to bring to fruition the completion of construction and the successful opening of the resort, even to the extent of being willing to invest more of its own funds to help cover the delay costs.

"Unfortunately, our efforts, as well as those of the Bahamian government, have not accomplished that objective. Construction on the project remains incomplete and, consequently, we have not been in a position to set a revised opening date. Thus, the Chapter 11 process is the best path for Baha Mar to now undertake," Izmirlian said.

The board's resolutions were contained in a supporting document appended to BML's chapter 11 bankruptcy filing, which stunned the country late yesterday afternoon and sent some of the resort's most substantial partners into hastily convened board meetings.

Indeed, there was reportedly an emergency Cabinet meeting last night as well, and Guardian Business was given to understand that the government was unaware of the company's intention to file for bankruptcy in the U.S. In fact, no fewer than two Cabinet ministers over the last two weeks put their credibility on the line to say on the record that Prime Minister Perry Christie - through his personal intervention and efforts - had virtually secured a deal, and that it was up to Baha Mar CEO Sarkis Izmirlian to seal it.

BML is a Bahamian International Business Corporation (IBC).

The BML board of directors considered materials presented by its financial, legal and other advisors and held numerous discussions regarding those materials and the liabilities and liquidity situation of the company, the strategic alternatives available to it, and the impact of the foregoing on the company's businesses and operations.

Given the substance of those discussions, the board decided its best option was a voluntary petition under the provisions of Chapter 11 of the United States Bankruptcy Code.

The BML board resolved to file for bankruptcy protection "in the best interests of the company, its shareholders, creditors and other stakeholders and parties in interest including, without limitation, the direct and indirect subsidiaries of the company".

In addition to filing for Chapter 11 relief, the company either filed or intended to file - it is not yet clear - a corresponding proceeding in the Supreme Court of The Bahamas under Part VIIA of the Companies (Winding Up Amendment) Act, 2011 (CWUAA). That filing would designate Northshore Mainland Services Inc., a Delaware corporation, as the foreign representative of each of the Chapter 11 debtors in connection with the International Co-Operation Proceeding (the "foreign representative").

Baha Mar President Thomas M. Dunlap and Executive Vice President Whitney Thier were designated by the board to take any and all action that they deem necessary or proper to obtain such relief, including, without limitation, any action necessary to maintain the ordinary course operation of the company's business.

The company has retained Glinton Sweeting O'Brien ("GSO") as general Bahamian counsel to represent and assist BML and its subsidiaries in carrying out their duties under the CWUAA and to take any and all actions to advance the company's and its subsidiaries' rights and obligations, including filing any pleadings in the International Co-Operation Proceeding. The firm has also been retained as counsel to represent and assist the foreign representative - Northshore Mainland Services - in carrying out its duties under the CWUAA and to take any and all actions to advance the foreign representative's rights and obligations, including filing any pleadings in the international co-operation proceeding.

In addition to retaining a number of other firms, the company has also retained Kobre & Kim LLP (Kobre & Kim) as special litigation counsel to represent and assist the company in contemplated litigation. It is anticipated that Kobre & Kim will represent in issues relating to the rights and remedies connected with the various contracts concerning the design and construction of the Baha Mar development, the management of those contracts and the financial guarantees received in connection with some or all of those contracts. It is expected that such litigation will include causes of action in tort and equity. Kobre & Kim will be charged with advancing its client's interests by filing any pleadings and commencing one or more legal proceedings.

The company has also retained Glaser Weil Fink Howard Avchen & Shapiro LLP (Glaser Weil) as construction counsel for related purposes to that in respect of Kobre & Kim.

The board also authorized Dunlap and Thier to terminate the employment of any of the company's employees on behalf of the company. This includes but is not limited to layoffs of all or substantially all of the employees. Dunlap and Thier are also authorized to pay or cause to be paid severance or other payments to terminated employees, in accordance with local law.

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