600-plus Harlequin investors sign petition urging FSCS to ‘butt out’

More than 600 mostly UK-based investors have signed a petition, organised by the developer of a bankrupt Caribbean resort in which they are invested, which calls on the UK’s Financial Services Compensation Scheme to “stop interfering” in the matter.

The 649 investors signed the petition within the past seven days, according to the developer, Harlequin Hotels & Resorts, which said they did so in response to the compensation scheme’s interjection last month in a St Vincent and the Grenadines court case involving the resort – which action, the developer claims, ” helped to put Harlequin Property (SVG)  into bankruptcy”.

This in turn, it said, thus “robbed 3,000 investors of a vote on a rescue plan that could potentially avoid bankruptcy and liquidation” for the development.

Specifically, the petition says: “I, the HP SVG investor named below, believe the FSCS should stop interfering in the Proposal process, and allow HP SVG investors the opportunity to vote on the Proposal [and thus] potentially avoid bankruptcy.”

Harlequin summarised the investors’ petition as urging the FSCS “to butt out & allow [a vote]” on its proposal.

Included with the petition was a survey, which found that 726 of 758 HP SVG investors who responded – or 96% – agreed with the statement that the FSCS “should stop interfering in the Proposal process, and allow investors the opportunity to avoid bankruptcy.”

The petition, which was signed by investors on the understanding that it would be shared with the FSCS and no other third parties, is due to be sent to the FSCS later this week.

The FSCS has been asked for a response to the investors’ petition.

Normally when investors are caught up in bankrupt investments, the FSCS, which provides compensation in situations in which clients of UK-authorised financial services businesses are left out-of-pocket, is regarded as their champion. It was set up in 2001, and is funded by a levy on firms whose investors are covered by it.

FSCS argued ‘against’ proposal scheme

According to Harlequin, the FSCS twice argued in the St Vincent court against allowing the company time to present its proposal.

As reported, this proposal was drawn up by the developer earlier this year, making use of a new facility under St Vincent and the Grenadines law.

As envisioned by Harlequin, it would see HP(SVG)’s  flagship Buccament Bay Resort restored to “full use for the benefit of Harlequin Property (SVG) investors”, who would be handed ownership of the resort, through the issuing of shares in the company in exchange for the debt owed to them.

The resort would then be managed under a five-year contract by one of four hotel management companies currently interested in the deal.

The Harlequin plan was dealt a setback at the end of February, after the St Vincent and the Grenadines court refused to grant the developer more time to put its plan together — thus forcing it into all-but-certain bankruptcy. The company said it planned to appeal the decision. Harlequin entered bankruptcy on on 24 February.

A week earlier, the beleaguered founder of Harlequin, UK-based David Ames, was charged by the Serious Fraud Office with three counts of fraud in connection with his business. At the time, Ames denied all the charges and said he looked forward to clearing his name.

There are said to be around 3,600 investors, mainly located in the UK, many of whom bought into HP(SVG) on the advice of their financial advisers.

Harlequin Hotels & Resorts is the main Harlequin company that marketed a number of overseas property investment projects, one of which involved a couple of properties, the main one of which was the Buccament Bay Resort on the island of St Vincent.

Clients who invested in this property entered into a contract with an entity known as Harlequin Property SVG, which was this project’s developer and which owns the land on which the resort is built.

ABOUT THE AUTHOR
Helen Burggraf
Helen Burggraf is the editor of International Investment. A US-trained journalist, she has worked in Rome, New York City and London, covering everything from the fashion and retailing industries to the global drinking water and water-treatment sector, private equity, and most recently, the international cross-border financial services/advice industry.

Read more from Helen Burggraf

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