Silverpoint Investigations

Before we look at the investigations surrounding Silverpoint it would be good to go back in time and catalogue how the current position came about. Originally a sales company was established under the name of Resort Properties. Sales by this company mostly comprised timeshare in Beverly Hills Club, Hollywood Mirage Club, Beverly Hills Heights Club, Club Paradiso and Palm Beach Club, all located in South Tenerife.

After some time, the company changed its name to Silverpoint Vacations SL. The original creator of the enterprise was the late Robert (Bob) Trotta, locally the operation was managed by Mark Cushway.

Spanish timeshare law changed on 5th January 1999 with the enactment of Law 42/98 and the provisions contained within section 1261 of the Spanish Civil Code. This law put into practice a number of requirements surrounding both how timeshare was sold and also how the product should be constructed. In this article we won’t be covering the law, however it’s fair to say that a number of timeshare developers including Silverpoint either failed to understand the law or chose to ignore it.

Globally it may be said that if you break the law there are penalties to pay. In 2015 the first case relating to timeshare being sold in contravention of Law 42/98 was heard in the courts in Gran Canaria, the presiding judge found in favour of the plaintiff. The order was that the timeshare be annulled and a return of purchase costs. This case caused a paradigm shift in amongst Spanish legal advisors resulting in substantial numbers of cases being presented to courts where evidence was given that the timeshare contract had broken Spanish law.

Silverpoint was not exempt from prosecution, it is estimated that approximately 1,500 timeshare owners have had cases submitted to the courts with Silverpoint having been found guilty, this even after protracted engineered appeals which naturally failed. What happened next?

Having a large potential financial expense to settle court awarded claims, the powers that be decided to place the company into administration. As usual the job of work of the appointed administrator is to carry out a financial audit and decide whether the company can be restructured and continue to trade, this is still in the process of happening. This is not an easy task for the administrator because in this case there are many complications.

Usually it is a fairly simple process to either save the company or if that cannot happen declare the company insolvent and enter the wind up process ending with bankruptcy. With Silverpoint the position is far from easy as we will discover.

To start with it’s estimated that the 1,500 or so claimants may be owed as much as €136 million, the problem facing the administrators is finding where this money is. Silverpoint was part of a much larger concern known as the Limora Group. The Limora Group consisted of at least 100 companies, many of which were housed in offshore tax havens such as the British Virgin Islands, in fact 16 different jurisdictions overall. Moving monies between the various entities within the group was a relatively simple task and it appears that this may have been the case.

Adding to the complications of the corporate structure is the fact that the top of the Limora Group pyramid is Limora Investments Ltd who has filed for Chapter 15 bankruptcy in the USA. The Chapter 15 Petition is for Recognition of a Foreign Main Proceeding in the British Virgin Islands by Alexander Lawson and Paul Pretlove, as the Foreign Representatives of Limora Investments Limited at the U. S. Bankruptcy Court for the Southern District of New York. Alexander Lawson and Paul Pretlove both work for Alvarez & Marsel based in the Cayman Islands. For certain Alexander Lawson has been involved in previous wind ups of Limora companies, an example being Azure in Malta.

Until, or even if, Silverpoint is completely wound up, claimants are still having their day in court with the predictable outcome. As the expression goes “It’s not over till the fat lady sings” and for now the fat lady is certainly not singing. The whole Silverpoint saga is currently being investigated by the Santa Cruz de Tenerife Prosecutor’s Office following a complaint filed by various law firms whose clients have a vested interest. So despite the underhand tactic of appointing administrators; the long arm of the law is now involved. This whole affair has dragged on for at least five years but there does appear to be movement, how long the remainder of the process will take is anybody’s guess but for sure this is one case that will not be swept under the carpet.

If you purchased a timeshare from Silverpoint or associated company then do not hesitate, contact Stephenson Cartwright & Associates TODAY! click here.