The continued Silverpoint saga
Will this ever end?
It appears that the authorities on Tenerife are not letting the bankruptcy of Silverpoint go unnoticed as Arona’s Investigating Court Number 1 has opened preliminary proceedings against Silverpoint Vacations SL (“Silverpoint”) and Excel Hotels & Resorts SA (“Excel”). The alleged crimes relate to the bankruptcy of Silverpoint, the timeshare operation that centred its operations in the south of Tenerife.
Due to contract irregularities that contravened Spanish timeshare law Silverpoint lost literally hundreds of cases presented to the courts but before these court orders could settle the awarded funds, Silverpoint went into voluntary liquidation in February 2020. Investigation has proved that considerable Silverpoint assets were siphoned, much of which went to offshore companies.
On top of this, investigation proved that significant assets of Silverpoint were also transferred to Excel before the insolvency was announced. Prosecutors in Tenerife are alleging crimes including punishable insolvency, frustration of execution, and procedural fraud.
One of the potential crimes known in Spanish as “alzamiento de bienes” translated in English means concealment of assets. Concealing assets makes it hard for creditors to discover the whereabouts of assets to recover so creditors may be paid. Investigation revealed that millions of Euro assets including timeshare weeks and apartments were removed from Silverpoint shortly before the company filed for bankruptcy.
One of the main recipients of these assets was the resort management company Excel, formerly known as Silverpoint Hotels & Resorts SA. Beverly Hills Club, Beverly Hills Heights, Hollywood Mirage and Palm Beach Club, are currently managed by Excel, Excel in turn are owned by OnaGrup who own and run apartments and hotels throughout Spain and the islands and are based in Barcelona.
The Spanish National Police specialist unit in economic and fiscal Crime (UDEF) has already prepared an extensive report on the links and participation of both companies in the alleged criminal acts.
It’s suspected that Silverpoint and Excel settled a “simulated” lawsuit between them in March 2018, when Silverpoint recognised an alleged debt with Excel and promised to pay by transferring “a very significant part, if not all of its corporate assets”. These assets included 7,347 certificate weeks, the long-term client portfolio, and a promise to pay Excel 6.7 million Euros.
The investigating judge has requested a list of the contracts concluded between both companies from the origin of their activity to the present. Also requested are lists of all the enforcement proceedings against Silverpoint, detailing the amounts of the sentences, whether they have been satisfied in whole or in part, and in what way, whether voluntarily or urgently.
The judge is taking this action, because, according to the prosecutor, these companies acted “in collusion” as part of a plan to avoid paying awards from court sentences. The investigation may also eventually expand to include the advisors of Silverpoint, Excel and its related companies, of which there are many.
No money?
Silverpoint entered into liquidation on the 1st February 2020. At the time, the company declared assets totalling 14 million Euros, with debts estimated at €28 million. However, the bankruptcy administrator´s report indicates that the company has assets of €83 million and liabilities of €141 million, the debts largely correspond to court awards to former clients.
In addition to the liquidation in Spain, a procedure for the bankruptcy of parent company Limora Investments Limited has been running in the Southern District of New York Bankruptcy Court. This process has highlighted how the timeshare complexes in the south of Tenerife were the main source of income for a huge corporate network of companies stretching across the globe including tax havens such as Dubai, The British Virgin Islands, Panama and Malta. It appears that the Limora Group used shell companies in various jurisdictions to transfer assets around the world, making it difficult for the Spanish authorities to both trace and recover said assets.