Rosewood tries to exit Baha Mar project

In a 420-page document filed with a Delaware bankruptcy court last week, Rosewood said its licensing agreement to build a 200-room hotel should be void after Baha Mar Ltd entered bankruptcy.

In addition to the inability of Baha Mar paying Rosewood since the June 29 bankruptcy filing, the Dallas-based hotel and resort company argued the developer falsely claimed that it was the legal owned of the hotel real estate. Rosewood continued to say that its brand is being “diminished” and “tarnished” due to its on-going association with the project.

“Each day, Rosewood continued to incur costs and expenses for which it is not being compensated,” the motion read. “Therefore, Rosewood is now suffering, and will suffer additional irreparable harm if it is not permitted to terminate the Rosewood Hotel Agreements and be relieved of its association with Baha Mar.”

Under the license agreement, signed in July 2011, Rosewood was set to manage Rosewood residences for a 30-year term and be compensated by Baha Mar. The sale agreement holds Baha Mar accountable to pay a percentage of the gross sale price from the initial sale of each residence, but the inability to sell the property has means this cannot be done.

“Baha Mar cannot sell what it does not own, and thus cannot perform its core obligations to compensate Rosewood under the license agreement,” stated Rosewood’s counsel. “Baha Mar has told Rosewood that it does not in fact own the land and a preliminary search performed on August 14, reflected that Baha Mar did not own any real property.”

Rosewood has requested that the Delaware Court, which is handling the Baha Mar bankruptcy, modify the automatic stay permit to allow the company to terminate its agreements and exit the project. The hotel operator is so far the only company that has expressed its intention to be released from its connection with the project.

The five-hotel project was originally scheduled to open by the end of 2014 and is slated to include the 1,000-room Baha Mar Casino Resort & Hotel, a 707-room Grand Hyatt, a 300-room SLS Lux, a 694-room Melia, as well as the Rosewood. Morgans Hotel Group and its Mondrian brand pulled out of the project last year and was replaced by the SLS Lux brand.