Members of the failed Club Paradiso in Tenerife have been sent emails by Owen Walker of R&H Restructuring based in Tortola, British Virgin Islands. The email was dated 13th October 2020 and contains various options to club members to pursue at this stage.
We reported the fact that the Joint Liquidators (JLs) had failed to find a company to take over the management of the club on 7th October 2020:
The situation remains the same, Club Paradiso members will not be able to holiday at the resort and without a management company the resort remains closed to the members.
What’s on the table now?
R&H Restructuring have put forward several possible scenarios for members:
- Continue being a member but with no future annual maintenance fees and no use of the resort.
- Terminate relationship with the club.
- Accept an offer from Regency Torviscas for holidays at discounted prices.
- Register as a creditor under the British Virgin Islands Insolvency Act 2003 and The Insolvency Rules 2005.
It would be pertinent to look at each of these scenarios and the impact each will have to members.
Continue being a member but with no future annual maintenance fees and no use of the resort.
We think this is self explanatory for the present, however, should a new company finally be found, albeit extremely unlikely then no doubt the benefits of membership could be restored together with annual maintenance fees. In our opinion this is the least likely scenario to consider.
Terminate relationship with the club
Again, pretty self explanatory. Resignation of membership removes any further rights afforded by the original purchase plus offers no return on the capital initially used for the purchase of the membership.
Accept an offer from Regency Torviscas for holidays at discounted prices.
All this seems to offer is not a replacement for the members’ contract so there are no strings attached. It appears to simply offer discounted holidays at the various resorts owned and operated by Regency Torviscas. Here is an extract from the letter giving details of discounts available:
Register as a creditor under the British Virgin Islands Insolvency Act 2003
and The Insolvency Rules 2005.
This seems to infer that there is a possibility of registering as a creditor in the courts of the British Virgin Islands against Club Paradiso Limited (in Liquidation). Under normal circumstances a company only enters liquidation because their combined debts are greater than their assets and liquidity, given this is the case with Club Paradiso Limited, what personal gain would be achieved?
Looking Deeper
The letter makes continual reference that the various offers on the table require agreement not to pursue claims in the future, by way of example, we quote;
“The JLs draw your attention to the waiver of any claims against the Company should you elect to participate in the Regency Offer.”
“agree to release, waive and discharge all claims and liabilities of any kind, whether direct or indirect, foreseen or unforeseen, contingent or actual, present or future, that you may have against the Club and/or the Company (the “Released Claims”) with immediate effect.”
These statements are rather odd in as much another paragraph gives a great explanation about the club liquidation so with this in mind why would anyone have to sign and agree to not making claims. What claims are available, apart from the BVI insolvency route? Do the JLs know something we don’t?
The JLs take an entire paragraph to intimate that Club Paradiso Limited has no money and that all the profit made from the sales went to third parties, this would seem to justify the fact that it’s no loss to waive the right to future claims; the exact paragraph is shown below:
“From the records currently available to the JLs, it would appear that third party entities, acting as agents of the Club, were engaged in selling Club memberships. At the current time, the JLs have been unable to establish that the Company itself sold memberships or formally engaged third parties to perform these sales on its behalf. It further appears that historic upfront subscription fees were not paid to the Company albeit it did collect Maintenance Fees up until these ceased in 2019. Accordingly, there is considerable uncertainty as to status of Members with regards the Company, and the extent to which such Members have standing in connection with liquidation of the Company.”
Having stated the above is it not interesting that another single line states:
“The JLs now have custody and control of the assets of the Company”
So in one breath they go to lengths to explain there are no real assets and in another they admit taking control of the assets, rather perplexing, would you not agree?
Proceed with caution
Given the fact that the only real benefit to be gained from the proposals is a discounted holiday package and for this, members must waive their rights to any “possible” compensation claim, realistically by doing nothing members are no worse off. Whilst there are no possibilities of holidaying at the resort as club members and because annual maintenance fees are now waivedit’s a stand still situation, no win no lose.
It must be remembered that TCA have no knowledge of any potential claim against the club, but it strikes us as rather strange that the JLs are making a rather large issue of obtaining member agreement waiving future rights to make a claim. Again, one must ask “Do they know something we don’t”.
To Conclude
As an advisory service, upon reading through the lines of this communication, our take on the situation is that those wishing to achieve financial compensation for their loss following the clubs collapse, should not accept the Regency offer, terminate their ownership or apply to the liquidator. Our best advice is to defer any decision until further information is available.
Another option that you may wish to consider is whether you qualify to make a compensation claim under Section 75 of the UK Consumer Credit 1974. The following article published on our website will explain this rather handy legislation; however we strongly advise that you seek professional assistance beforehand.
https://timeshareconsumerassociation.org.uk/?s=section+75
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