The land-owning arm of Harlequin Property has entered interim receivership, and its flagship resort closed after its electricity was disconnected.
Six thousand mainly UK pension investors ploughed around £400m into the unregulated overseas property scheme via financial advisers, hoping for ‘guaranteed returns’ of 10 per cent a year, which never came.
The Financial Services Compensation Scheme has already written down the value of the investment to nil for compensation payment purposes, and has paid out more than £100m in claims against advisers who sold the scheme.
Now FTAdviser has learnt that on Saturday (17 December), the High Court in Saint Vincent and the Grenadines, where Harlequin Property SVG is based, made an order appointing KPMG as interim receiver over the assets of company.
Receivership is a type of corporate bankruptcy in which a receiver is appointed by bankruptcy courts or creditors to run the company.
In many cases, the receiver is given ultimate decision-making powers and has full discretion in deciding how the received assets will be managed.
Received assets for Harlequin include all the land and other assets owned by Harlequin Property SVG.
However, in this case Harlequin has said that the interim receiver has been effectively appointed to protect property and raise funds to secure assets until a proposal to creditors is delivered in early 2017.
A post, which has since been removed, on the Facebook page for Harlequin’s Buccament Bay resort, stated the Caribbean holiday destination has “temporarily closed and plans to reopen in spring 2017”.
News sites based in Saint Vincent and the Grenadines, where Harlequin and Buccament Bay are located, have reported that staff at the resort have been on strike because they have not be paid.
A spokesperson for Harlequin confirmed the interim receivership order was made in St Vincent, though said it is not yet in its “final form”.
“We understand that the interim order is intended to protect Harlequin Property (SVG) Limited’s assets on a temporary basis until a proposal is made,” the spokesperson said.
“Harlequin expects to present its proposal in early 2017.”
On the closure of Buccament Bay and its various reported problems, the Harlequin spokesperson blamed the resort’s suppliers for refusing to wait for monies due from Harlequin’s recently successful High Court case against its former accountants, Wilkins Kennedy.
However in that case, Judge Mr Justice Coulson proposed the damages should be paid into a ringfenced escrow account for investors, rather than go to Harlequin or its chairman David Ames, with the judge stating he hoped such ringfencing to protect investors' interests could be done by agreement.
The Harlequin spokesperson said: “Sadly, within a week of winning the [Wilkins Kennedy] case, where monies (to the extent recoverable) will not be provided until earliest end of January, suppliers of the Buccament Bay Resort have already stated their clear intentions by changing agreed payment plans and making unrealistic demands with the threat of disconnecting services.