The 76-page report does not rule out the possibility that the company, formally known as Harlequin Management Services (South East), or HMSSE, could be rescued as a going concern, “with all or most of its business intact”, if the administrators can be convinced that it is sound enough to be put into a company voluntary arrangement (CVA).
However, an examination of the balance sheets included in the report suggests this will not be easy. Table A1, for example, a summary of liabilities, shows just £8,695 in estimated total assets available for preferential creditors, while the “estimated total deficiency/surplus as regards members” is given as £89,126,917.
Other numbers revealed in the report include the fact that HMSSE has some 329 trade creditors, who are owed a total of £4.287m; unpaid sales staff commissions total an estimated £1m; and David and Carol Ames, who are, respectively, the company’s chairman and his wife, are owed £16,373 each.
If Shipleys, the administrators, are unconvinced that there is a possibility of Harlequin being rescued, the alternatives are for an immediate wind-up of the company, or, if that were not possible either, a distribution to one or more secured or preferential creditors.
For now, the administrators say, they are "currently making enquiries" into the viability of a CVA, which they say is "Objective 1".
A creditors’ meeting has been set for 12 July.
Investors survey
Separately today, Regulatory Legal Solicitors, which is representing more than 1,000 Harlequin investors, has released what it says is a statistically sound survey of some 292 of them, which reveals, among other things, that almost all – or 95% – were never told that if they were unable to pay the balance on what they owed on completion of the project, they could end up in default and lose their deposit.
Given the amount of money that has been invested into Harlequin to date, Regulatory Legal estimates that investors are currently looking at a contractual risk of £200m being subject to forfeiture. Some 28% of investors, meanwhile, said they remortgaged their UK property to come up with the money to buy into Harlequin without telling their UK lender the reason for the mortgage and without realising that "this could be construed as mortgage fraud".
As previously reported, Harlequin’s problems began in January when the UK’s Financial Services Authority issued an alert on Harlequin after it became concerned with the high number of SIPPs invested in the company’s developments, and followed this up in March with a written request to providers of self-invested personal pensions (SIPPs), asking them to say whether they had any clients invested in the company.
Harlequin is meantime involved in a costly court case with investors in the UK, who are fighting for the return of around £500,000 they put into the company’s Buccament Bay Resort in the Caribbean. HMSSE was put into administration at the end of April, in the wake of news about the court case and reports that the UK’s Serious Fraud Office and Essex Police were investigating the business.
