An organisation claiming to represent around 2,000 investors who retain sizable stakes in the troubled Harlequin resort development business has issued a defiant call to action, in which it calls for investor support for a plan currently being put forward by Harlequin’s management to revive the business, rather than having it placed into liquidation.
The Pro-Harlequin Investors’ Group, which consists mainly of UK-based individual investors who bought off-plan investments in a beachfront resort complex known as Buccament Bay on the Caribbean island of St Vincent, argues that when a company like Harlequin is in trouble, “it should be supported by its investors to do everything possible to recover the business to the point it is successful for everyone”, rather than simply liquidating the business without considering other options and splitting up the proceeds, as they claim some rival investors are pushing for.
“We need heads on beds to bring in guest revenues as the only source of cash that will enable investors to recoup their outlays,” one of the PHIG members told International Investment in an interview, explaining the thinking behind the group’s first formal statement on the recently-revealed proposal.
He urged “any Harlequin investors who are not already members” of the Pro-Harlequin Investors’ Group, or PHIG, to join up, in order to learn more, and to participate in the dialogue about their investment’s future.
In its formal statement, the PHIG elaborated: “We are all too aware of the massive financial and personal hardships [resulting from the Harlequin Property difficulties] which have already caused people to lose their houses, cause family breakups and worse.
“Financial compensation can only partly compensate SIPP [self-invested personal pension] and mortgage investors. There is no known compensation available to the 1,600 investors [who paid for their Harlequin stakes in cash], and nothing compensates anyone for the personal losses and distress.
“To deny people the opportunity to help create a recovery plan is plain wrong. People need the opportunity to work together to turn their lives around, come together and succeed.”
The PHIG statement stresses that the group isn’t arguing that their calling for investors to back the proposed plan means that they know, without a shadow of a doubt, that it would be a better option than a straightforward liquidation, only that they believe that investors should give it equal consideration, with both options being evaluated using the same standard and degree of due diligence.
The saga of Harlequin Property and its thousands of out-of-pocket investors has been running for years. It began when a British property developer named David Ames, who had some success with a holiday resort in the Indian state of Goa, sought to build a number of similar developments in the Caribbean. One of these, the Hotel Blu resort in St Lucia, is up and running.
Ames’s Buccament Bay development initially seemed also destined for success, and even won a number of travel awards in its early days, including the World Travel Awards’ “Caribbean’s Leading New Hotel” in 2012, but began to suffer setbacks even before this.
These, according to Ames and press reports, included problems with a contractor who he claims hadn’t carried out works it had been paid to do, and changes by the UK regulator of the rules under which UK investors could include properties like Buccament Bay in their self-invested personal pension (SIPPs), which affected the ability of existing investors to continue to stay invested in the scheme, and made others unable to invest.
Nevertheless, the 157-unit Buccament Bay resort, a view of which is pictured above, had been operating until December, when it closed after it was hit with an electricity bill from its local provider that it couldn’t pay, and which Ames argued it had originally agreed to allow to be paid back in instalments. This came days after, as reported, Harlequin won a US$11.6m (£9.14m) claim against it former accountants, Wilkins Kennedy, in the British High Court,on 12 December.
Meantime, Ames and his team were working on plans to enter into a type of bankruptcy-postponement scheme newly introduced to Saint Vincent and the Grenadines corporate law, called a “Notice of Intention to Make a Proposal”. This scheme is basically designed to give distressed companies like Harlequin a six-month window of opportunity in which to write and present a proposal to creditors that is better than the only other option, of liquidation.
It is this scheme that the PHIG is arguing all the investors in Harlequin Property SVG – which consists of the Buccament Bay property as well as an undeveloped piece of land called Merricks in Barbados – should consider, alongside the obvious option of having the company liquidated and what remains of its assets after “trade creditors” have been paid being dispersed to investors.
Last week, as reported, it emerged that the Harlequin rescue plan, which is still being worked on by Harlequin’s management, had been the subject of some critical comments by the proposal’s official trustee, Brian Glasgow of KPMG, who said that the as-yet-unfinished proposal lacked sufficient information on which to make an informed decision.