Potential breakthrough for Harlequin investors, as plan unveiled, favourable judgment upheld
Thousands of investors in the beleaguered Harlequin Property development scheme on the Caribbean island of St Vincent are today beginning to be told of what the scheme’s developer insists is a genuinely viable proposal for reviving the development, which is said to involve four as-yet-unnamed hotel management companies vying to manage the resort for Harlequin investors.
The news of the proposal, which Harlequin chairman David Ames said has been months in setting up and is being exclusively revealed here, comes a day after the UK’s Court of Appeal turned down a request by the UK accountancy, Wilkins Kennedy, to appeal a High Court judgment last December, which ordered it to pay US$11.5m (£9.14m) to Harlequin, in connection with an over-payment to a construction company known as ICE Group.
In a statement, a spokesperson for Wilkins Kennedy said the firm was “extremely disappointed” by the Court of Appeal’s decision.
Ames said it was his intention that the US$11.5m – minus legal fees and other costs incurred in bringing the legal case against Wilkins Kennedy – would be put towards restoring Harlequin’s flagship Buccament Bay Resort in St Vincent to “full use for the benefit of Harlequin Property (SVG) investors”, who, he explained, would be handed ownership of the resort.
“Mr Justice Coulson [who presided over last year’s High Court case, and wrote the judgment published in December] wanted the investors to benefit from these monies, and it is my hope that, as part of the proposal [involving the un-named hotel management companies], 3,000 investors will take control of Buccament Bay Resort, oversee a new hotel management company, and utilise the judgment funds to refurbish the resort for their ongoing benefit,” Ames said.
“After five years, they will have the option to sell the resort for further financial benefit, or retain it as a going concern.”
As reported here earlier this month, Wilkins Kennedy, a major UK accountancy firm, filed a request to appeal against the December judgment against it, citing “a number of grounds”.
The 183-page December ruling found in favour of Harlequin on just one of a number of claims it brought, for failing to advise Harlequin to enter into a contract with ICE.
In an interview with International Investment, Ames said he believed that a happy ending was at last in sight for the almost 2,000 investors who had signed up to buy properties off-plan in the Buccament Bay development, many of whom did so before the global financial crisis hit in 2008, which he said had contributed to the problems that beset Harlequin’s projects.
Prior to launching Buccament Bay, Ames – who is based in Wickford, in the Southeast England county of Essex, outside of London – successfully built and sold a resort development in the Indian state of Goa. He currently has one operating successfully on the Caribbean island of St Lucia, called Hotel Blu, as well as a property in Barbados that has yet to be developed.
Harlequin broke ground on the Buccament Bay development in 2006. At first it seemed destined to become a new Caribbean favourite among British sun-lovers, alongside such well-known resorts as Sandy Lane, Barbados; Sandals Halcyon Beach Resort, St Lucia; and Jumby Bay, Antigua. The development even won a number of travel awards initially, including the World Travel Awards’ “Caribbean’s Leading New Hotel” in 2012.
The problems began sometime around 2010, according to Ames and press reports, when, the company alleged, works that it had paid a contractor to carry out weren’t completed.
Another problem, he said, is that the UK regulator changed the rules under which UK investors could include properties like Buccament Bay in their self-invested personal pension (SIPPs), and began to crack down on those who already had such properties in their SIPPs.
In spite of such problems, Ames said he has retained the support of a surprising number of Buccament Bay investors, which, he added, has helped to keep him going.
“The reason they support me is that they actually understand what I’m trying to do, and that the business model works.”
The Buccament Bay resort had been operating until last month, when, according to local press reports and Ames, it was closed down after it was hit by an electricity bill from its local provider that it couldn’t pay and which, according to Ames, was “hugely inflated” from a payment plan that had been agreed on earlier. Ames said the bill had been issued “within a week of [our] winning [ the US$11.5m in the] Wilkins Kennedy case”, and came with a threat to disconnect the resort’s electricity if it weren’t paid.
“I refused to allow Harlequin to be held to ransom as it had been before, and the only option was to close the Resort,” Ames added.
“I hope the investors can now take it forward and reap the benefits.”
A notice on the resort’s website says it has been “temporarily closed, and plans to re-open in spring 2017 after refurbishment”.
‘Notice of Intention to Make a Proposal’
According to Ames, the proposal involving the four hotel management companies plus the winnings from the Wilkins Kennedy court case had been conceived in response to a threat last year to force a wind-up the Buccament Bay business, issued by a UK solicitor who represents around 100 Harlequin investors.
At that point, Ames said, a decision was taken to enter into a recently-introduced facility in St Vincent and the Grenadines called a “Notice of Intention to Make a Proposal”, which enables a company up to six months, with court approval, to put together a proposal to repay its creditors without having to enter liquidation.
Harlequin investors account for the vast majority of creditors in the development, according to Ames.
Buccament Bay Facts
* The site is 25 acres (101,000 sq m)
* It currently offers some 157 accommodations, ranging from studio apartments to four-bedroom villas with plunge pools
* There are three swimming pools and five restaurants, including a café
* Activities on offer, when the resort is open, include football coaching on a five-a-side artificial pitch or a full-sized grass pitch; tennis coaching (there are two courts); fitness training; a kids’ club; diving and water sports; performing arts academy run by a “West End” tutor; excursions to explore the island
* The white Buccament Bay beach sand had to be imported, as the natural local sand is black in colour