The company which owns the resorts is insolvent.
Insolvency is described as either “unable or unwilling to pay your debts if and when due”.
If an inability to pay debts is determined by a court then a trustee is appointed in the form of an “official receiver”. They in turn appoint an insolvency practitioner (in the event the insolvent company has assets) to sell the company’s assets for the purpose of satisfying (in part or whole), the creditors).
Creditors in many cases have different rights (by way of example), secured creditors, preferred creditors and unsecured creditors.
It’s the insolvency services task to appoint a liquidator for the company. In so doing they will perform many functions including selling off all the fixed, floating and current assets. Apart from other tasks, they will pay the creditors proportionally out of the proceeds raised.
In this case a large asset exists in the form of the entire resorts and the underlining infantry contained within it. Equally the company will have cash reserves, debts owed to it, client lists and goodwill. All disposable and sellable stock!
When the resort is sold, it will be either sold as an encumbered asset or one free from restrictions. The forward sale transaction will be “fee simple” if possible.
The difference is that the resorts assets will either be subject to a blight of not. The blight (by way of example can be the “occupational rights” which are enjoyed by others). These blights are called are forward liabilities. Such liabilities have to be taken into consideration by the liquidator.
The occupational rights are owned by the consumers and they are not a party in the liquidation and should be treated as secured creditors who have elevated rights.
By way of example, when you acquire a property- you own the equitable interest and the “right to occupy”. You acquire its equity and the right to occupy (two legal principles are at play) the latter is vested in the consumers.
Some people choose to rent the “right to occupy” to tenants’. If the landlord goes bust it does not affect the rights of the tenant who still owns his rights. That said if the liquidator can take back the “occupation rights” the property so the asset becomes unencumbered (therefore attracting a higher value). The difference in value would be the consideration offered to the people with the “right to occupy” and or a consideration would have to be offered for that loss.
Timeshare and pre booked holidays in a hotel are all forms of “occupancy rights”
As the new buyer will inherit blights/advanced liabilities, those rights have to be removed and/or resolved. That said: the liquidators will be required to address those parties who make a claim against the property.
The liquidator will have two options either pay-off the consumers in exchange for the giving up their rights or take those rights into consideration in any forward sale of the resort.
The price tendered offer (by any buyer) will reduce if forward liabilities are associated with the sale, so as to provide a contra consideration for the forward blight.
If the blight is declared the buyer (having an opportunity to perform-due diligence-on the blight) will be bound to honour those established rights if they are inherited with the sale.
In the alternative a deal could be struck whereby a consideration is offered to those who have established their “rights of occupation” so as to compensate them for the loss of the “occupation rights”.
Timeshare, long term holiday products and Pure Points will fall into “occupational rights” and consumers have a need to decide what they want to do!
Either claim a continuance of those rights (when and if a new buyer is found)
or
Relinquish them in exchange for a consideration.
Relinquishment ought to be granted as the right, as that right has been frustrated. The causation of the frustration is the insolvency of the resort itself and is remote from the consumer.
The choice is entirely that of the consumers and no one should interfere with that thought process. It is (in reality) your choice. That said, once you have made your choice then you can act so as to preserved your position.
Firstly: Long Term Holiday Products (Pre-paid holiday accommodation)
If you have pre paid for holidays and you want to keep them, you must either register your interest with the insolvency practitioner and ask him to take you interest into consideration and register a “right to occupy” (either fixed of floating occupancy), alternatively ask him to register you as a preferred creditor so as you can receive your share in the liquidation proceeds.
Timeshare
If you wish to use this event to terminate your timeshare you can do so and claim that your timeshare contract has been frustrated. You can claim damages from the liquidator and again be included in any forward liquidations proceeds.
In the event you wish to keep the timeshare, then you will have to register an “occupational right” with the liquidator so that your right to occupy is noted and the future owner will be informed.
The liquidator has a duty to you and to register your claims and that being so you should assist him.
As the resort is governed by Portuguese law and no doubt controlled by Portuguese liquidator, your legal claim will have to be authored in Portuguese with appendix English copies. Such letters are legal documents and should be all encompassing as to the right and wishes you wish to retain or enforce.
Silence
As the liquidation process will conclude the affairs of the company, if you don’t act you might attract a future event which you were not expecting. That event could impart a liability on you and such liabilities could be issued as proceeding in Portugal and if liabilities flow from those proceedings it is likely that European warrants will be issued for the recovery of the liabilities in the UK.
Silences and in-action may not be the best choice in these events.
For more information regarding this article or assistance in any other timeshare related issues please contact the TCA on 01908 881058 or email: info@TimeshareConsumerAssociation.org.uk