Harlequin rescue plan challenged by KPMG ‘proposal trustee’
A proposal that would see Harlequin Property’s troubled, currently-shuttered resort on the Caribbean island of St Vincent revived, as conceived by the scheme’s developer and unveiled here last month, is now the subject of challenging comments from a KPMG specialist who last year was named the trustee of the plan.
A report issued by “proposal trustee” Brian Glasgow was lodged in the Saint Vincent and the Grenadines Supreme Court on 24 January, and subsequently posted on the accountancy firm’s website. This report, say those who support the idea of trying to revive the resort rather than seeing it forced into bankruptcy, has given opponents of the rescue plan fresh ammunition to challenge it, which they say these opponents are now doing by attempting to throw doubt on the viability of the proposed plan.
Among Glasgow’s contentions in his report is that the proposal, as it currently stands, lacks sufficient information on which to make an informed decision, and that it is based on assumptions that could prove to be wrong, with no alternative provisions being made, in the event that they were to. In particular, he argues, “an estimated outcome statement…detailing why the proposal being put forward will produce a better financial result than a liquidation of the company” is needed.
Another issue, the KPMG document reveals, is how much of some US$11.5m (£9.14m) Harlequin won in a UK High Court case in December against its former accountants is likely to actually be available to either save the business or return to investors.
The Harlequin property saga dates back to 2006, when Ames, an experienced developer based in the suburban London county of Essex, broke ground on a development that was to become what is now known as the Buccament Bay Resort, pictured above, on the Caribbean island of Saint Vincent, with funding coming from mainly British investors who were enticed into buying off-plan villas by their financial advisers.
Although it at first it seemed destined to become a new Caribbean favourite among British sun-lovers, problems there and at other Harlequin sites began to mount sometime around 2010.
Nevertheless, and perhaps more than most property investment schemes that have gone wrong and which have received, at times, some highly negative press coverage, Harlequin has retained a significant, if not known, number of investors who have remained loyal to the original developer – in this case, Ames. Yet at the same time, it apparently also has a significant number of investors who are keen to see the business put into bankruptcy sooner rather than later, and everyone given a share of what remains of its assets.
Many of those who have remained loyal to Ames’s intention of seeing the company come through receivership as a viable concern have filed passionate affidavits in support of this strategy in court, and belong to the Pro-Harlequin Investors’ Group, which has its own website at www.united2succeed.org.uk.
Proposal trustee’s report
The 39-page KPMG report by proposal trustee Glasgow is described in its introduction as a summary of “the background of this matter, and the progress of the proposed process to date, which it is hoped will allow creditors to put such communication in context”.
Glasgow’s opinion with respect to the proposal is considered key, though, if it is to be allowed by the Saint Vincent and the Grenadines Authorities to go ahead.
As reported, the plan for reviving Harlequin Property centres around a scheme that would see Harlequin’s flagship Buccament Bay Resort restored to “full use for the benefit of Harlequin Property (SVG) investors”, who, according to Harlequin chairman David Ames, 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.
One of the hotel management companies is located in the Caribbean, the other three come from elsewhere, according to Ames.
To see the report by Glasgow on the KPMG website, click here.