Baha Mar charged yesterday that the government of The Bahamas is to blame for a decision by one of its luxury brands to seek to terminate its agreement with the mega resort.

Baha Mar said the government’s move to block the process that would have given it access to funding, in addition to the government’s pursuit of a winding up petition, have created uncertainty surrounding the future of the development.

Rosewood Hotel and Resorts International filed a motion to terminate its license agreement with Baha Mar in a U.S. Supreme Court on Wednesday.

Rosewood cited Baha Mar’s inability to secure funding as part of the reason for its motion.

“Unfortunately, as the motion itself makes clear, this action is a direct result of the efforts of the government of The Bahamas to both oppose the recognition of the Chapter 11 process in The Bahamas and pursue its current course of action, which has injected uncertainty and disruption, and prevented Baha Mar from moving forward in a productive manner to complete and open the resort,” said the Baha Mar statement.

Baha Mar filed Chapter 11 bankruptcy in the United States on June 29 and was seeking recognition of that process in the Bahamian courts. The government objected to Baha Mar’s recognition bid.

On July 22, Supreme Court Justice Ian Winder rejected Baha Mar’s application.

The ruling means that the various orders handed down by a U.S. judge after Baha Mar’s bankruptcy filing cannot take effect in The Bahamas.

Among other things, the U.S. judge authorized $30 million debtor-in-possession (DIP) funding, which Baha Mar says is crucial to meet operational expenses and payroll. A portion of that money was also set aside for severance payments for Baha Mar staff.

Baha Mar previously expressed alarm that the government objected to its application and on more than one occasion questioned if the government was truly neutral. The attorney general has since filed a winding up petition, which is currently being heard in the Supreme Court.In its motion to terminate its agreement, Rosewood said as a result of that ruling, “The debtors (Baha Mar) have extremely limited access to post-petition financing or cash collateral.

“Indeed, counsel for the debtors stated in open court on July 20, 2015, in response to the court’s questioning about the debtors’ ability to make certain payroll payments: ‘Your honor, all I can say at this moment is that with respect to what the Northshore debtor has, it can only currently allocate $64,000, at this particular moment’.”

Rosewood went on to state that it has on multiple occasions since the petition date asked Baha Mar how it intends to be able to perform its obligations to Rosewood including specifically asking about the status of funding; however, Baha Mar has been unable to provide any assurance of funding.

“Although Rosewood has taken a patient course since the surprise filing of these Chapter 11 cases, it is now apparent that Baha Mar has been unable, despite nearly two months in Chapter 11, to secure adequate financing to perform its obligations under the Rosewood hotel agreements.”

In addition to a lack of funding, Rosewood said Baha Mar has incurred numerous “incurable” defaults. Among other things, Rosewood said Baha Mar is in violation of its representation and warranty to Rosewood that it owns the Cable Beach property on which the hotel and associated residences are situated; construction of the hotel has ceased for more than 30 consecutive days; Baha Mar has failed to pay both the rank-and-file employees and the senior executives at the hotel, some of whom Rosewood requires to run the hotel, and has failed to reimburse Rosewood for pre-petition and post-petition fees and expenses due under the Rosewood hotel agreements.

Additionally, Rosewood said Baha Mar’s filing its Chapter 11 case is a default under the license agreement and other Rosewood hotel agreements.

In response to the motion, Baha Mar said, “Under the U.S. Chapter 11 process, property of a debtor's estate is protected by the automatic stay, and we will address this request for relief from the automatic stay with the bankruptcy court in due course.”