China Construction America, (CCA), speaking through a New York-based communications consultancy, said yesterday it intends to appeal the “deeply flawed” ruling by Justice Andrew Borrok of the Supreme Court of the State of New York, who found that CCA committed multiple breaches and acts of fraud, and those breaches and acts of fraud caused the loss of Sarkis Izmirlian’s company’s entire $845 million investment in the Baha Mar project at Cable Beach.
As a result, BML Properties Ltd. (BMLP) was awarded a $1.6 billion judgment.
Izmirlian said his company intends to proceed with the enforcement of that judgment in an “equally thoughtful and prudent manner” as the judge who delivered the decision.
But CCA said yesterday, “The court’s decision is deeply flawed under well-settled principles of New York law, and we intend to appeal.
“The decision ignores indisputable evidence that BML Properties overborrowed, overspent and overextended itself and then drove the project into a wrongful, secret bankruptcy – without first seeking the contractually required consent of minority investor CSCEC Bahamas – to eliminate its obligations at the expense of other stakeholders, including not only CSCEC Bahamas and construction manager CCA Bahamas, which made tireless efforts to complete the Baha Mar project on time and within budget, but the Bahamian government, subcontractors and workers.”
The judge found that BML proved that by clear and convincing evidence that CCA’s multiple acts of fraud and breaches of an agreement to act in the best interest of BML caused the project to miss the date for partial opening.
The court said, “Mr. Izmirlian credibly testified that if he had known the project would not open on March 27, 2015, BML would have conserved its cash and would not have entered into the liquidity crisis that ultimately led to its liquidation and the loss of BML’s investment.
“In fact, and as discussed above, trial revealed that if the CSCECB board member and CCAB had not committed to the March 27, 2015 opening, BML would not have agreed to the release of $54 million.”
The judge ruled that CCA committed a number of breaches and fraudulent acts.
“Aside from never telling BML of the urgent need for more workers, as he was obligated to do as the CSCECB (China State Construction Engineering Corporation Bahamas) board member, these assurances by Mr. [Tiger] Wu and his subordinates [that the project was on track] were false and designed to induce reliance by BMLP and in Daniel Liu’s words ultimately “turn passive into active” and cause a liquidity crisis pushing BMLP out of its $845 million investment. This is exactly what happened,” the ruling said.
“Additionally, the defendants committed fraud by making the representation that they needed a $54 million payment so that they could pay subcontractors. The evidence adduced at trial established they did not need it or use it for that purpose. They wanted it and used it to buy a competing hotel development down the road (i.e., the Hilton).”
Izmirlian, facing a liquidity crisis in June 2015, filed for Chapter 11 bankruptcy in Delaware.
In his ruling, Justice Borrok said, “For the avoidance of doubt, and as discussed more completely below, the defendants utterly failed to prove their counter-claims or any damages in support of their counter-claims stemming from BMLP’s alleged breach or otherwise.”
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Publish date : 2024-10-22 00:34:00
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