Around 9,000 investors in collapsed overseas property firm Harlequin Property are no closer to knowing whether their claims against the company are valid after administrators set out the complexity of the claims process.
Harlequin Property, the trading name of Harlequin Management Services (South East), is an unregulated firm that sold investments in luxury resorts in the Caribbean and elsewhere, with some clients investing in Harlequin through their Sipps.
Anthony Davidson and Stephen Ryman of Shipleys were appointed as joint administrators in May.
It emerged last week that contracts were between investors and the overseas companies, so investors may not have valid claims against Harlequin Property.
Speaking at a creditors’ meeting in London today, joint administrator Anthony Davidson set out Shipleys’ approach to the treatment of investor claims.
He said: “We have obtained advice from counsel and on the face of it, there is not a contractual agreement between investors and Harlequin. That said, we are aware there be some aspects of claims we have to look at closer. We have seen one claim with regards to misrepresentation, and while I am not saying that claim is valid, claims of this nature are worthy of investigation.”
Davidson explained the issue with claims involving misrepresentation is which party the claim is against, which could be Harlequin Property, the wider Harlequin Group, or the advisers that recommended investing in Harlequin.
Sorting out creditor claims is further complicated by the fact that among the £89.1m in claims, around £78m is due to other Harlequin companies and related parties.
Options for Harlequin Property include a company voluntary arrangement, which would see creditors repaid over a fixed period, and liquidation, which could involve winding up orders against the overseas companies.
Davidson said: “We do not want to take aggressive steps now, if it does more harm than good. The onus is on Harlequin Property to prove a CVA can be accomplished.
“We are very conscious of the importance in trying to establish who the creditors are, and whether investors are to be treated as creditors. It is not black and white. It may be that for every individual investor the situation is different. This is at the top of our list in terms of priorities.”
A spokesman for Harlequin has stressed that Harlequin Property is separate from the rest of the Harlequin group of companies, and that money received by Harlequin Property has been passed to the overseas companies, minus commission.
He says: “Harlequin is committed to developing its hotels and building investors’ properties to deliver contracted rental returns in future.”
Separately to the administration process, Harlequin and law firm Regulatory Legal are in talks over a restructuring plan to try and secure Harlequin investments. Talks are said to be in an advanced stage, though details of the restructure have not been released.