PropertyMar 7 2017

Harlequin investors petition FSCS to 'butt out'

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Harlequin investors petition FSCS to 'butt out'

Troubled overseas property company Harlequin is calling on the Financial Services Compensation Scheme to "butt out" by dropping its opposition to attempts to stave off the company’s liquidation.

Six thousand mainly British pension investors ploughed around £400m into the unregulated overseas property scheme via UK financial advisers, hoping for ‘guaranteed returns’ of 10 per cent a year from luxury villas, which never came.

The FSCS has paid out tens of millions in compensation in relation to advice to invest in Harlequin, taking over investors’ rights in the process to make it one of the company’s biggest creditors.

As a creditor it opposed giving Harlequin chairman David Ames more time to come up with a rescue proposal for the company at a recent hearing in Saint Vincent and the Grenadines, where the company is based.

The judge agreed, ruling Harlequin had been given enough time to right itself, and that the only way forward was liquidation, which Harlequin is appealing.

Now Harlequin is seeking to put pressure on the FSCS to reverse its stance, with a petition of investors who Harlequin claims want the FSCS “to stop interfering”.

In a statement, Harlequin claim 649 investors have signed the petition, which Harlequin plans to lodge with the FSCS later this week.

The company entered formal insolvency proceedings in October 2016, giving it a maximum of six months to, according to a Harlequin spokesperson, “work with a professional trustee to assist it to sort out its business affairs”.

But on 24 February the court in Saint Vincent and the Grenadines refused a third application by Mr Ames to give him more time to come up with a viable alternative to liquidation.

Justice Sir St Clare Roberts said the court’s decision to refuse the extension was on the grounds he was “not satisfied that the insolvent person [Mr Ames] has acted or is acting with due diligence”.

On the viability of Mr Ames’ draft proposal for Harlequin, the judge said: “There is still the lack of financial data which is necessary for the proposal.”

“The whole proposal in many aspects is based on opaque projections,” he continued.

The FSCS has been asked to comment.

laura.miller@ft.com