In a statement released late yesterday afternoon, Harlequin charged that the firm, which it referred to as “R Legal”, had been engaging in an “on-going PR campaign… intended to do little more than create further anxiety amongst investors in order to attract custom to their firm”.
It continued: “R Legal has recently stated that it is working with Harlequin on a ‘rescue plan’. It is not. Harlequin as a group is, however, engaged in a restructuring process. Neither R Legal nor any of its staff are involved in this process in any way.”
Harlequin said it had issued the statement in order to “set the record straight” concerning what it said were “a number of conflicting”, and false, recent public statements by the law firm.
Regulatory Legal, it claimed, had “encouraged purchasers to turn against Harlequin”, causing what it said was “undue panic and alarm among purchasers” two months ago when, in an article, it claimed that “Harlequin’s assets would be frozen in March” – an application which, it noted, had failed.
The Harlequin statement continues: “R Legal is of course entitled to represent its clients and advise them as it deems fit; it is not, however, allowed to attempt to jeopardise the investments of the remaining overwhelming majority of investors, nor will we allow this.”
Regulatory Legal issued a brief response this morning. It said: "Regulatory Legal acts for investors. That is our only concern, and whatever we need to do to achieve the protection of our clients we will do. Investors have paid over circa £400m.
In the last week we have advised investors to hand over no further monies until a restructure is completed. That is sensible, and we entirely stand by it.
"If that upsets Harlequin, so be it."
Latest in series
Yesterday’s attack on Regulatory Legal by Harlequin was the latest in a series of charges and counter-charges launched by both sides against the other in recent weeks, as they race against a clock and actions by the courts to secure the best possible outcome for their side.
Some 6,000 individuals are said to have invested in off-plan Harlequin properties, many of them, apparently, ill-advisedly through self-invested personal pensions.
Last week, after Harlequin Hotels & Resorts chairman Dave Ames urged investors “in a position to fund the balance outstanding” on their contracts to buy off-plan properties at the company’s Buccament Bay Resort in St Vincent and the Grenadines+ – which he said had now been completed – Regulatory Legal partner Gareth Fatchett was quoted as urging people “not to complete until the Harlequin business has been restructured”.
“We are also encouraging clients to submit proof of debt claims with the administrator,” Fatchett said.
Trouble ‘started in January’
As reported, the trouble for Harlequin started in January when the Financial Services Authority issued an alert on the company, and on 1 March, contacted Sipp providers, asking them to say whether they have any clients invested in the firm, which it said is not FSA regulated.
Media interested was piqued after the BBC postponed a Panorama episode which was to have included a look at Harlequin, and the producer of the show was first suspended, over bribery allegations, and later resigned. Two weeks later, the company – again, the UK marketing operation rather than Harlequin Hotels & Resorts – applied to go into administration.
Degrees of separation unclear
One of the key areas of dispute is the extent to which the hotels and resorts business is ring-fenced from the ailing, UK sales arm.
“They are separate companies that serve distinctly different purposes and the circumstances of Harlequin Property do not affect the status of our investors’ completed properties,” is how a Harlequin spokesman explains the relationship.
“Harlequin Property, the company that has entered administration, is purely the sales arm of the Harlequin group of companies, which facilitates the purchasing of overseas property investments in Harlequin Hotels & Resorts’ projects.”
However, Regulatory Legal is equally adamant that doing nothing “while matters worsen is not a strategy [the Harlequin Investor Group, which the firm represents] are prepared to adopt”.
It urged that all investors capable of doing so take the necessary steps to file a so-called “statutory demand” against the company.
This is a legal document that basically gives a company 21 days to either settle a debt or reach an agreement to pay, failing which the matter would move to bankruptcy proceedings or a winding up of the business.
To read the Harlequin statement in full on a website it has set up for investors, click here.
