An effort by a group of out-of-pocket investors keen to see a plan that would have sought to see a bankrupt Caribbean resort revived, rather than liquidated, is being seen to have failed, after the investors’ candidates weren’t chosen in sufficient numbers for a five-member board of “inspectors” that is needed as part of the bankruptcy proceedings.
The news came late on Tuesday in London, in the form of an announcement from KPMG, the Bankruptcy trustee in the matter of Harlequin Property (SVG), after a vote that was held on Monday at KPMG’s offices in London, and in Kingstown, St Vincent and the Grenadines.
St Vincent and the Grenadines is where Harlequin Property’s flagship resort, Buccament Bay, is located, and where the company is based, although most of its investors are British. They had invested in the company at the advice of their UK financial advisers.
In its statement, KPMG said 2,041 votes had been cast in the inspectors’ ballot, representing investments worth “in excess of £118m”.
The statement notes that “a considerable claim exceeding £100m was rejected for voting purposes” and had been “excluded from these statistics”. It didn’t say who made this claim, but added that “the Supervisor of Insolvency has entered into correspondence with this creditor in relation to their claim”, and that the bankruptcy trustee (KPMG) “will adjudicate on this claim in due course”.
Dave Ames, the founder and chairman of Harlequin Property, couldn’t immediately be reached for comment.
A spokesman for a Harlequin investors’ group, PHIG, said in a statement that its members “congratulate the inspectors on their election” in the vote held yesterday, and that they “look forward to working with the [bankruptcy] trustee and Inspector Board to not only to analyse the company activities, but also to ensure that investors are given the opportunity to take title to the assets for which they have paid substantial sums, together with the monies arising from the Wilkins Kennedy case proceeds, which Mr Justice Coulson expressed should be to the benefit of investors”.
The Wilkins Kennedy case, as reported, was a legal matter involving Harlequin that concluded in the UK Court of Appeal in January, which concerned an over-payment to a construction company known as ICE Group, and saw Harlequin being awarded US$11.5m (£9.14m), but with conditions attached to its payment.
Also in its statement, PHIG, which as reported in February had supported the idea of a plan to revive Harlequin rather than liquidating it, added: “We remain of the view that a business solution is available to alleviate the pain incurred by investors in this situation, [which is] capable of realising a greater return that conventional liquidation.
“We urge the willing and imagination from all parties to work together to the benefit of all investors.”
David Ames, pictured left, is the one who had put together the plan to get Buccament Bay resort back in operation, by taking advantage of a new Saint Vincent and the Grenadines regime designed to give companies facing bankruptcy an alternative to liquidation.
He recently said that he was concerned that if his plan didn’t succeed, hundreds of investors who had paid for their stake in Harlequin with cash would be left with considerably less than their initial investment, as this is all they’re likely to get once all the liquidation takes place, and that this is one of the reasons he had put the plan together.
Those whose investments had been covered by the UK’s Financial Services Compensation Scheme (FSCS) – which voted on behalf of the investors it had reimbursed, as it had taken over their claim as creditors – were already taken care of, he noted, and thus these investors weren’t involved in yesterday’s vote.
In total there were said to be more than 3,000 investors in Harlequin, mainly individuals, most of whom had assigned their votes to parties involved in the matter, including lawyers who had been represent them. One of them, Gareth Fatchett, of Waterside Legal LLP, was among the five inspectors chosen.
The other four were James Darbyshire, general counsel, the FSCS; John Cullen and Thomas Kelen, Harlequin investors; and Stewart Haynes, whose affiliation wasn’t immediately known.
As reported, the case has been unusual in that Ames has had the support of an undisclosed but apparently large number of the project’s out-of-pocket investors. Normally investors in failed property developments, of which there have been many in recent years, universally blame the developers for having, in their eyes, pocketed their savings.
The Harlequin saga began more than a decade ago, when Harlequin broke ground on its St Vincent and the Grenadines flagship resort development, Buccament Bay, with thousands of mainly UK residents buying off-plan properties at the suggestion of their financial advisers.
At first it seemed destined to become a new Caribbean favourite among British sun-lovers, but it soon ran into trouble, and ended up in the courts.
Among the reasons Ames thought his plan had a chance was because, he said, he had four hotel organisations keen to take on the running of Buccament Bay, which is partially built and until December was operational; and because the island of St Vincent, where Buccament Bay is located, has a new airport that for the first time will be able to handle international flights, thus increasing its potential attraction as a holiday destination.