“We are urging every investor to register in the HMSSE administration.”
Gareth Fatchett, Regulatory Legal Solicitors (Forms attached at bottom)
With over 10,000 discussion comments on Barbados Free Press, Harlequin “investors” (and we use the word somewhat tongue-in-cheek) have lots to say and discuss.
Here’s the latest we have from Gareth Fatchett of Regulatory Legal Solicitors – a memo sent out on May 17, 2013.
Perhaps our readers can add what’s happened since…
From: Regulatory Legal Solicitors [mailto:email@example.com]
Sent: 17 May 2013 17:09
To: Gareth Fatchett
Subject: 17th May 2013 – HIG UPDATE
At outset, HIG are more than prepared to continue to engage with Harlequin and will seek to understand and support a rescue plan where this is feasible notwithstanding the protective steps we are suggesting below. ie. our objective is to pursue different strategies which aim to achieve the best outcome for investors regardless of the course adopted. Simply sitting back while matters worsen is not a strategy HIG are prepared to adopt.
HIG members are all investors in Harlequin and would like nothing more than it to work. However, we have to be realistic. It is not going to work in the current format. It needs a major overhaul to give us any chance of surviving. Currently, the whole process is dictated by a handful of people at the Harlequin core. Frankly, that does not work for investors who need to understand the actual position.
The seriousness of the situation has increased with a High Court Judge making an order against Mr & Mrs Ames personally. Of course, Mr & Mrs Ames are able to challenge the order and seek to have it revoked. What is concerning for HIG is that the order was granted in the first place.
We are trying to keep an open mind, but the slippage of timetables, non payment of creditors and the issuing and granting of the injunction does little to reassure us.
Plan A – Rescue Plan
We have not received the Rescue Plan as yet. We were promised some details this week. We are now promised the documents during next week. There is little point in speculating as to the content. We will advise on the detail if and when we receive it. What we can say is that for any plan to work the vast majority of investors will need to be in agreement. The current position suggests that this is far from the case.
Questions posed to David Ames
We expect detailed answers to our questions by the 23rd May 2013. To date we have received nothing.
HIG PLAN OF ACTION
Plan B – Securing of Assets
The Harlequin Investor Group feels it is time to prepare for a worsening of the situation. The advice from HIG is that everyone capable of issuing a Statutory Demand should do so.
It announces the intent of the investors
It allows people to move quickly upon expiration of the demand period (21 days)
There are some defined groups who need to make demands :-
Group 1 – Investors with “Finance Agreements” with Harlequin Property (SVG) Limited where the missed payments exceed £750.00.
Group 2 – Investors who hold contracts (with any Harlequin company) where their Completion Date has expired.
Group 3 – Investors who hold contracts with Buccament Bay Resort Limited (any date).
Group 4 – Investors who hold contracts relating to the investment within Brazil.
Gather together a copy of your contract along with evidence of the date you paid monies to Harlequin Management Services (South East) Limited.
Send the documents to firstname.lastname@example.org
The relevant statutory demand will be issued and served in SVG.
The cost to deal with this process is £360.00. If you have multiple properties please let us know.
Why should you do this ?
If a Rescue Plan proceeds then the only way the threat of a winding up petition being presented (following the expiration of the statutory demands (21 days)) is to come to terms (eg agree to pay off the demands).
If a Rescue Plan is not possible then investors may wish to take matters into their own hands. By being one of many statutory demands we can petition the relevant court together with a consolidated petition.
HIG feel that we have to increase pressure on Harlequin. If not, matters will drift.
Queries – please call Martyn Anderson at Regulatory Legal Solicitors on 01384 426400.
Can we withdraw the Statutory Demands ?
Yes, if a satisfactory proposal is received all court papers can be withdrawn.
You will have seen in the papers that 13 investors obtained an ex-parte injunction against David & Carol Ames personally on the 14th May 2013. The return date at court in London is on the 28th May 2013.
The RL damages claims against BBR (1) David Ames (2) and HMSSE (3) was issued early April 2013. David Ames has notified RL of his intention to defend the claim.
As at today just under 100 Statutory Demands have been issued. Many of these have gone beyond the 21 day period. Therefore, they are operable. No challenge to the debt has been made by Harlequin’s lawyers in SVG.
In one case positive instructions have been given to issue a Winding Up petition.
The simple conclusion is that investors are becoming impatient. Nervousness will not have been reduced by a High Court Judge issuing the £1.1m freezing order. Far from it. The call/ email level has risen dramatically.
Dealings with Harlequin Assets
HIG have asked for some form of confirmation that there will be no disposals of Harlequin assets (other than in the normal course of dealing).
HIG take the view that any and all steps should be taken to prevent dealing of the land / corporate assets of Harlequin. With this in mind, RL have emailed Harlequin and their advisers to seek a confirmation by close on the 24th May 2013. If no such confirmation is received, then HIG will set out the further steps investors should be taking to protect their positions. Advice has been requested from lawyers in the Caribbean.
This week has seen very little positives to report from Harlequin. We understand that David & Carol Ames are in SVG for the next week. There lack of attending to matters here is very telling.
We will be updating everyone about Proof of Debt forms over the weekend. Please make sure you deal with these forms as soon as possible.
We will be updating everyone on other matters on the 24th May 2013.
Visit Regulatory Legal Solicitors at: http://harlequininvestorgroup.co.uk
We are urging every investor to register in the HMSSE administration.
From: Regulatory Legal Solicitors [mailto:email@example.com]
Sent: 14 May 2013 06:51
To: Gareth Fatchett
Subject: Register as a Creditor of Harlequin Management Services (South East) Limited – ACTION REQUIRED
Query – Should I register a Proof of Debt form ?
We have received calls asking us whether or not investors should register as a creditor of Harlequin Management Services (South East) Limited “HMSSE”. Our guidance is that all Harlequin Investors should register as proof of debt form with Shipleys.Two insolvency practitioners within Shipleys are acting as joint administrators of HMSSE.
Rationale for entering a Proof of Debt form
Even though investors contracted with one of the Caribbean companies, every penny of investor monies went via HMSSE in Basildon. Every investor expected their money to be applied to their investment in the Caribbean.
Every investor paid the money to HMSSE as agent (of their own specific Caribbean company). As agent HMSSE deducted commission to agent, management expenses etc and then remitted the balance to the Caribbean.
Every investor believes that the payment of the monies to HMSSE was for the sole purpose of transmitting he monies to the Caribbean.
As we all know now, some 33% of monies were paid in commission to agents / IFA’s and approx 14% was retained as management expenses by HMSSE. Our understanding is that the total turnover to December 2012 is some £400m. Of course, the accounts only run to March 2011.
Therefore, with some £200m being charged as expenses by HMSSE it is only right and proper that investors see a proper account.
The first stage in this is for every investor to lodge a Proof of Debt form with Shipleys.
How do I lodge a Proof of Debt Form ?
1. On the enclosed link is the letter sent by Shipleys to known HMSSE creditors. Shipleys Letters – please click link to download . The form is contained therein. Also, you can lodge the form by sending it to Graant Meadows (his email and contact details are on the front page). Please ensure you do this by the weekend.
2. You will need a copy of your contract to send with the Proof of Debt Form. If you have more than one contract you will need to complete one per investment.
3. You will need to insert the date your monies were remitted to HMSSE. If this was done by a third party (eg a SIPP) then you will need to ask them. If they cannot tell you, then put “on or about DATE”.
4. A model Proof of Debt Form is enclosed on this link to help you.
Proof of Debt Form – Example – this assists you to complete the Shipleys Form
Proof of Debt Form – Particulars Example – this document assists you in adding the particulars of the debt
Why should I lodge the Proof of Debt Form ?
1. All investors should be part of the process. If you do not engage, you will not be written to.
2. If the administration process fails then liquidators would need to be appointed. It is important that investors make up the clear majority of creditors by value. There are intercompany positions (eg other Harlequin companies) who will be creditors. If they hold the majority, they will control the future conduct of the insolvency process.
If you have lodged the forms, please tell us you have done this by sending us a quick email at firstname.lastname@example.org . Please give us the amount you have lodged so we can calculate the running total of creditor claims.
Even though a Rescue Plan is being worked on, all investors need to act as if nothing were happening. This is the prudent and cautious path.
More on the Proof of Debt Forms!
From: Regulatory Legal Solicitors
Sent: Tuesday, 14 May 2013 22:10 PM
To: Regulatory Legal Solicitors
Reply To: email@example.com
Subject: 14th May 2013 – Harlequin Management Services (South East) Limited
Harlequin “Advice” of the 14th May 2013 not to complete Proof of Debt Forms
It is very sad that investors who stand to lose significant parts of their investments are being encouraged not to take part in the insolvency process running with Harlequin Management Services (South East) Limited. Our colleagues at Pannone LLP (solicitors) are advising that all investors lodge Proof of Debt forms. We advise the same. Counsel we have spoken to advice a cautious approach is best adopted by lodging the forms.
If you need any further persuading consider this.
1. HMSSE has received just shy of £400m in deposits until the end of December 2012. That is serious money in anyones books. It is bigger than CF Arch Cru funds, bigger than the SLS or Lifemark individual elements of the Keydata funds. In investment terms this is one of the biggest non-mainstream funds with problems we can remember. It should be scrutinised.
2. The enclosed documents reference some of the representations made on behalf of HMSSE.
Document 1 – 14th December 2006 100% Finance Scheme – 14th December 2006 – click on the link
“In cases where we are unable to obtain finance for you, we will be prepared to refund the £1,000.00 reservation fee.”
This document refers to “guaranteed”. It also refers to “subject to status and conditions apply”.
It is a fact that the vast majority of investors only invested due to the representations from HMSSE that finance would be available. Investors are entitled to have HMSSE’s books and records inspected to see whether the senior management at HMSSE ever arranged such facilities.
Document 2 – October 2008 – 70% Guaranteed Mortgage Letter – click on the link
“However, it is made clear in all the Harlequin literature and advertising that a 70% guaranteed mortgage is available. This is because Harlequin are fully aware that it is not possible for clients to raise mortgages in the Caribbean so the Harlequin business model, and the fact that there is no borrowing on any of the projects will enable funding to be raised and passed on to our investors.”
Our view is that this representation would be a material inducement for people to part with their monies. Surely, people in this situation require an explanation of this statement ?
Document 3 – 20th August 2008 – Ringfenced Monies – Segregation of Monies – click on the link
“We wish to confirm that all monies we receive on each development is used for the development only.
For example, if you were to pay us 30% deposit for a property in Buccament Bay, this would only be used for the Buccament Bay development.
I trust this clarified the situation but should you require any further details please do not hesitate to contact us”
This is simply untrue. The monies were intermingled. Many investors on the Brazil project paid deposits and when the project was no longer proceeding, why did they all not receive their money back ? If the monies had been as described above then people would have been protected. Sadly, many Brazil project holders have not received their monies back.
Is Harlequin seriously asking these people not to register a Proof of Debt form to require an explanation from the administrators ? Can it be the case that every Brazil investor is not interested in an explanation ?
Document 4 – 24th March 2009 – Note to Agents – HMSSE note to agents – 24th March 2009
Prior to 24th March 2009 it is very clear that some agents were suggesting to agents that the payments were ringfenced. Hardly surprising if the Investments Manager – Daniel Dalligan was telling people as much in 2008.
Any agent making these statements is going to face a difficult job explaining themselves. The HMSSE records will show which agents made such statements. They will show how the Senior Management dealt with the concerns.
We would anticipate that all investors would want this investigated and an explanation provided to the administrators. Surely, investors would want to know what happened ?
Document 5 – 12th February 2013 – Letter from Williams & Williams Solicitors Williams & Williams letter
Read this letter carefully. The first piece of land properly registered with a Harlequin company was in January 2009.
Is Harlequin seriously inviting people who invested before January 2009 not to require an explanation of this. Many of the investors we speak to tell us that they were told the land was owned by Harlequin. This is a serious issue and a proper investigation needs to occur.
Why would Harlequin not want investors engaged ?
The usual process is that the adminisator will make proposals to creditors. A vote is taken on these proposals.
We believe (as do our other legal colleagues) that it is important that investors control this process. With all the monies routed via HMSSE, we strongly believe it would take a brave administrator to deny an investor the right to vote as a creditor.
Investors need answers. The selection of the 5 documents above tell us that the directors / officers and senior staff at HMSSE have some searching questions to answer.
This process ensures that the administrators carry out their duties fastidiously.
Whilst at the same time that the Harlequin Investor Group are seeking to assist a rescue, the Harlequin machine continues to dissuade investors from seeking answers to very legitimate questions. This has nothing to do with the Irish Court case or the Wilkins Kennedy matter. It is all to do with the conduct of HMSSE in the making of representations to investors which procured their monies. Nothing more. The past has to be accounted for irrespective of what the future holds.
If you feel satisfied with the Harlequin machine (as Mr Ames claims), then do nothing and sit back. After all, you have already convinced yourself all is well. If not, get your proof of debt in.
If you missed our earlier email explaining how to do this, please email firstname.lastname@example.org