Harlequin, owners of the failed Buccament Bay Resort which has been closed since December when its electricity was disconnected amidst financial problems, including an inability to pay its staff, says that investors in the tourism plant do not want it to be liquidated.
In a press release on Tuesday, Harlequin said that a survey of investors in Harlequin Property (SVG) Limited (HP SVG) has found that 95 per cent want to avoid liquidation.
Harlequin, which is in a proposal process to keep the resort out of bankruptcy, said that the survey showed that 90 per cent of its investors find the key features of Harlequin’s upcoming proposal “appealing”, and 88 per cent support the idea of HP SVG investors owning all HP SVG assets, including Buccament Bay Resort.
Harlequin said it carried out the survey in the first week of February 2017 and received 700 responses, which represents 23 per cent of the 3,000 HP SVG investors.
Six questions were presented in the survey, followed by a rating of importance of the issue, to ascertain investors’ thoughts on a range of matters relating to the proposal process currently being played out in the St Vincent courts. The responses are being used by Harlequin to inform its final drafting of the Proposal, which has been made with input from investors.
The proposal, which is due to be finalised and put to HP SVG investors within weeks, will offer the investors ownership of the resort via a nominated group of creditors, along with related financial benefits, and a commitment by Harlequin to refurbish the Resort for the investors using the damages recovered from its successful High Court Judgment against former accountants Wilkins Kennedy (after legal, funder costs, etc). If the Proposal is rejected, HP SVG and its assets will enter a liquidation process.
In December, a judge in England ordered that Wilkins Kennedy pay US$11.6 million to Harlequin Property (SVG) Ltd. The sum represents half of the amount that the firm overpaid to ICE Group (SVG) Ltd., a contracting firm that worked on the resort between 2008 and 2010.
The judge, Justice Coulson, also said in the ruling that he “would not want that sum paid direct to Harlequin Property SVG, at least not at this stage.
“My proposal is to have it paid into some sort of escrow account whilst the competing interests of the company, the liquidators (if they have been appointed) and, in particular, the investors are resolved. I would hope that this — or something like it — can be done by way of agreement,” the judge ruled.
Justice Coulson also said that that Harlequin’s business model might be said to bear “the hallmarks of a serious and significant scam”.
Harlequin is managed by its chairman, Britain-born Dave Ames, a fugitive from justice in St. Vincent and the Grenadines, where he is facing theft and tax evasion charges.
Ames, who acquired SVG citizenship on account of the Buccament Bay Resort investment, fled the country via speedboat in June 2016 as prosecutors swooped in on him.
Ames next court date is next week Friday, Feb. 17.
Ames welcomed the survey responses, saying, “Two crucial results have come out from this: 9 out of 10 HP SVG investors like the main features of the Proposal package, and virtually all investors want to avoid liquidation if possible.”
Ames further said that the most important thing for him is ensuring that investors can make the best of this situation, adding that it is clear that HP SVG investors want the chance to make the most of their investment monies, if it’s viable to do so.
“This is why I’m prepared to hand them control of HP SVG’s assets, including what was, until very recently, a successful, multi-award-winning resort,” he said.
“Creating a viable and attractive proposal is a massive undertaking on limited resources, but we’ve made a lot of progress in a short space of time. The viability aspect requires some cooperation from external parties, which can take time to arrange, but the fantastic level of engagement from investors via meetings, telephone calls, correspondence and survey responses has made the fine tuning of the Proposal’s main features much easier.”
He said there are one or two third parties pushing for a liquidation scenario, but said he firmly believes HP SVG investors “deserve and must have a meaningful vote on the finished product, free of outside interference.
“Within a matter of weeks, the proposal will be completed and investors will receive a robust document that allows them to make a fully informed decision. This process isn’t about someone’s feelings towards me or professionals gaining fees; this is about the financial futures of regular people from all walks of life,” Ames said.
The Harlequin press release came one day after Prime Minister of St. Vincent and the Grenadines, Ralph Gonsalves, said in his Budget Address on Monday that at least four regional and international hotel groups “have expressed an active interest in managing” Buccament Bay Resort.
“Indeed, I have met with four such entities,” Gonsalves said, adding that he is “constrained by reason of the legal and other processes to comment further.
“However, I assure everyone concerned that the government will not allow the Resort at Buccament to go to waste! It will be restored, expanded, and properly managed. Meanwhile, let us permit the legal process through the Bankruptcy and Insolvency Act, and related laws, to work.
“This is not the first time that a hotel has failed in the Caribbean, or elsewhere, and restored to a better condition. This is the nature of business and its attendant risks. The Minister of Economic Planning and I have recently discussed the relevant bundle of issues with the workers at the Resort who have lost their jobs,” Gonsalves said.
On Oct. 3, 2016, a solicitor representing around 100 Harlequin investors threatened to wind up HP SVG. In order to protect the approximately 3,000 Harlequin investors with contracts with the company, Harlequin decided to enter HP SVG into a process called a Notice of Intention to Make a Proposal, the press release said.
A Notice of Intention is a new facility in St Vincent law that allows the company up to a maximum of six months (dependent on court approval) to put together a proposal to repay its creditors without entering bankruptcy.
Harlequin investors account for the vast majority of creditors in HP SVG. Harlequin is finalising the Proposal with input from a number of investor groups to ensure it provides investors with the best possible realistic opportunity to receive significant financial recompense. It is Harlequin’s belief that the offer far exceeds the negligible amount that liquidation would provide in the event of a fire sale of assets, the release said.
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