Chinese firm seeks to dismiss Baha Mar resort bankruptcy case

(Adds details in 2nd paragraph from China Construction court filing)

By Tom Hals and Tim McLaughlin

WILMINGTON (LSE: WIL.L - news) , Del., July 20 (Reuters) - The Chinese company building the $3.5 billion Baha Mar resort in the Bahamas on Monday filed a motion to dismiss the bankruptcy case related to the project, which is nearly complete and seen as vital to the former British colony's fragile economy.

China Construction America (CCA (Shanghai: 603100.SS - news) ), a unit of Chinese State Construction Engineering Corp Ltd, said the Baha Mar case belongs in the courts of the Bahamas, not in the United (Shenzhen: 000925.SZ - news) States, as a matter of national sovereignty. CCA's motion to dismiss said nearly all the interested parties in the case are located in the Bahamas.

The Bahamian government has taken steps to appoint liquidators for Baha Mar, which is 97 percent complete and will feature a Las Vegas-style casino and more than 2,000 hotel rooms. Prime Minister Perry Christie calls completion of the project a matter of national importance and says it could be finished more quickly through a liquidation process in the Bahamas.

A completed resort would employ more than 5,000 people in the Bahamas, where the unemployment is 16 percent, and boost its gross domestic product by about 12 percent, according to estimates from the government and the resort's developer, Baha Mar Ltd.

But Baha Mar, run by Sarkis Izmirlian, wants to reorganize under U.S. bankruptcy laws and is trying to get the proceedings in Delaware recognized by Bahamian courts. It filed for bankruptcy protection on June 29.

Izmirlian, son of Armenian billionaire Dikran Izmirlian, has blamed the Chinese construction firm for the delays that forced the resort to miss its opening in late March. CCA says his development team mismanaged the project.

The Izmirlian family has invested more than $900 million in the project.

Baha Mar Ltd is trying to renegotiate with China's export import bank, which bankrolled most of the project with a $2.45 billion loan.

On Monday, U.S. Bankruptcy Judge Kevin Carey described the two sides as "beating the heck out of each other" during a hearing in Wilmington, Delaware. The judge then sent them to a mediation room to try to sort out a dispute over seized construction project records.

CCA has accused Baha Mar Ltd of seizing documents and computer files, while Baha Mar Ltd has accused the Chinese firm of trying to steal documents, court filings show.

"To add fuel to the fire and increasing the level of heat doesn't always help," Carey said in court. (Reporting by Tim McLaughlin; Editing by Paul Simao and David Gregorio)