Legal action over stalled Caroline Bay
A legal bid to put the assets of the stalled Caroline Bay resort project into the hands of provisional liquidators was launched yesterday, the Government
revealed last night.
A spokeswoman for the Ministry of Finance said: “The developers acknowledged in February 2018 that they were unable to pay their debts and while the Government has done everything prudently possible to support efforts to refinance the project, to date the developers have failed to provide an acceptable way forward.”
She added that senior members of professional services firm EY Bermuda had been appointed as joint provisional liquidators and it was planned that they would “take control of various project companies, representing the collateral behind the original project loans and Bermuda Government guarantees”.
The spokeswoman said: “As the Government has expressed previously, the intention is to protect the interests of the people of Bermuda to the fullest extent permissible under the law.”
Curtis Dickinson, the finance minister, will hold a press conference today to reveal more details.
The project, at the former US Naval Annex at Morgan’s Point in the West End, was backed with a $165 million government guarantee arranged under the previous One Bermuda Alliance administration, which had to be paid to lenders last year after finance for the development collapsed.
The payout required Parliament to approve a $200 million line of credit for the Ministry of Finance and the island’s debt ceiling was raised by $250 million as a result.
Work started on the 250-acre peninsula about four years after a land swap between the developers, which included Bermudian insurance industry legend Brian Duperreault, the CEO of AIG, and the Government.
The Southlands estate in Warwick was exchanged for Morgan’s Point, on condition remediation work at the brownfield site was carried out before construction started.
The company behind the resort said that the site would include a Ritz-Carlton Reserve hotel, luxury homes and a marina capable of accommodating mega yachts, as well as a spa, restaurants and upmarket retail stores.
The marina was opened in time for the 2017 America’s Cup, but construction work stalled in February 2018.
The developers, George’s Bay Ltd, said that “first phase construction activity at Caroline Bay has been reduced ... due to construction costs outpacing the existing financing of the project”.
The firm said it planned to extend financing so work could get back to normal as soon as possible.
The Government, however, was later forced to pay back the project’s lenders after it received notices of default in June and August of last year.
Mr Dickinson said in this year’s Budget statement that the Government maintained a “legitimate expectation” that it would recover the cash paid out to the resort’s creditors.
He added that Bermudian construction firms left unpaid for their work were also compensated after the Government “purchased the claims from project contractors”.
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