As we have reported previously, Club la Costa (CLC) owes tens of millions to former customers in legally awarded compensation due to ignoring Spanish consumer laws for well over a decade. The timeshare giant profited at the expense of its members, as have many other timeshare companies in Spain. For the last 6 years, the Spanish legal system has been dispensing justice in the form of annulment of illegal timeshare contracts and financial compensation to those owners affected.
Like many other giant timeshare companies in Spain, CLC has been accused of underhand behaviour in order to avoid paying their creditors, including legal court mandated financial awards to illegally sold customers. As far as CLC were concerned, simply placing their offending companies both in the UK and Spain into administration would provide the necessary wriggle room to circumvent the law.
Many claimants were apprehensive that CLC’s labyrinth of inter-company structures would prove difficult for the administrators to unravel in the short period of time left in the initial bankruptcy investigations. It is standard insolvency practise to allow a period of 12 months to carry out all investigations and reach a conclusion.
Major Spanish legal firms felt that the original appointed administrators, BDO, may not be able to achieve the results necessary to thoroughly investigate and find the funds in order to obtain the legally ordered compensation for their clients. This resulted in the removal of BDO as administrators, the latter being replaced by FRP, as we reported in July.
FRP report compensation claims safe
Many claimants and industry experts were concerned that CLC might try to ‘run out the clock’ so to speak. An administration period is traditionally limited, as stated above, and the concern was that corporate funds might be extremely well hidden thus giving the administrators difficulty in locating them. FRP realised that their task certainly would take in excess of the normal time allocated. On 11th November 2021 FRP applied to Companies House for a 12 month extension, this has been duly granted. FRP have recently communicated this fact and below we quote their confirmation paragraph:
“We have now extended the administration term for a further 12 months and our investigations are active and ongoing with a view to recovering funds for creditors.”
This extra 12 months gives the administrators the requisite time they’ll need to carry out their investigations, maybe more than enough time. It has to be remembered that FRP are one of the worlds most respected and competent administration firms.
What now?
This move must surely place a spanner in the works of the “foolproof” plan devised by CLC. As we have said all along, for an extremely large and very profitable group of companies to go from hero to zero in such a short period made no sense at all, after all administration procedures are only put in place when a company is, or is about to become insolvent. If the whole CLC Empire had collapsed, we could understand but as CLC is still very much alive and trading we are at a loss. FRP are no doubt aware of this and will take the relevant steps to untangle the financial web woven by CLC.
For those with claims already lodged and upheld we are advised by leading law firm, M1 Legal, that all these cases have already been acknowledged and accepted by FRP.
For potential claimants, i.e. those who haven’t been through the Spanish court process but are in possession of contracts that are deemed illegal under Spanish law, FRP are again willing to accept the requisite legal evidence of proof presented by a competent legal advisor and subsequently be accepted as a creditor. This 12 month extension provides for those who believe they are affected to present their evidence of the fact. This being the case, logic dictates that action should be taken sooner rather than later.
Our thoughts
Globally the timeshare industry has rapidly been acquiring a less than savoury reputation. The internet is full of stories about the rampant mis selling, lies and the massive pressure placed on consumers at the point of sale. Maintenance fees that vastly outweigh the value of the product, the lack of availability and the feeling of being locked into a long term contract with seemingly no escape route. Add to this the engineered insolvency of not only CLC but Anfi and Silverpoint, all done in an attempt to avoid bona fide court rulings for either not understanding national law, or worse still the blatant ignoring and dismissing of the law, it becomes no surprise that sales figures, especially in Europe are at an all time low and falling further.
The Covid pandemic has a part to play in the current scenario but the industry rot set in long before most of us had even heard of Wuhan. It’s about time that certain developers are brought to task. We sincerely hope that the tenacity of law firms such as M1 Legal with the combined expertise of FRP will finally send a message to the industry as a whole that if they want to survive then stop the underhanded tactics, abide by the law and once again accept that the customer is king not some piece of dirt you can do with as you like.
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