Harlequin Management Services (South East) Ltd, the UK sales are of the embattled overseas property development business which trades as Harlequin Property, is set to enter liquidation after it was put into administration 18 months ago.
Harlequin Property was the primary UK sales agent for Harlequin’s Caribbean-based resort development companies. It is not regulated by the Financial Conduct Authority.
Harlequin filed a notice of intention to appoint an administrator at the High Court of Justice in April 2013. At the time, a spokesperson for the company said the administration “will not threaten” investments.
The administration came after an alert from the Financial Conduct Authority, the first of several issued by the regulator, to advisers over clients which were invested in self-invested pensions weighted heavily to Harlequin property assets.
According to FTAdviser sister publication Financial Adviser, in August the Serious Fraud Office confirmed it is still investigating the Harlequin Group.
The Financial Services Compensation Scheme also recently stated that it cannot confirm if compensation can be paid in respect of recommendations by advisers to invest via Harlequin Property into Harlequin Hotels and Resorts, the overseas development arm.
In a statement, issued this afternoon (14 October), Harlequin says its sales agent function is no longer required for Harlequin to achieve its restructuring goals because “we no longer sell nor intend to continue to sell off-plan overseas freehold investments (aside from completions of existing investments)”.
It continues that Harlequin Property acted in a ‘trustee’ capacity, by sending client money to overseas development companies in accordance with the investor guidelines, minus commission given to advisers and used for promotion.
FTAdviser previously revealed Harlequin paid financial advisers a commission rate of up to 9 per cent.
The statement also reaffirms investments are “safe”, telling investors to check their contract which states in all cases that their investment is with an overseas development company and not Harlequin Property, which is a standalone entity.
It says: “We are certain in the belief that the liquidation will not threaten Harlequin investments. Any third party redress services that attempt to cause alarm around this news do not have a full understanding of the situation and are likely acting in their own interests for financial gain.”
Speaking exclusively to FTAdviser, a spokesperson told FTAdviser that once the Harlequin Investor Trust which is aiming to buy up unsold properties in its flagship Buccament Bay resort has been established, this will also provide an exit route for existing investors.
He added work to establish the ‘trust’ is ongoing and that it should be launched by early next year.
“Our focus is on establishing the Trust, securing finance, managing successful hotels, and pushing ahead with development so we can provide the results desired by each type of investor, whether they are seeking completion and rental returns, cancellations or re-sales.”
The spokesperson also said that in recent days Harlequin had received another ‘letter of intent’ from an unnamed “potential financier” that has not been previously disclosed.