What were Palm Beach Club investors promised?
During 2014 investors were assured they would receive an apartment with title within three years and good annual rental returns in the meantime. However, as of today investors have been left owning timeshare weeks and haven’t received the money they were promised.
Palm Beach Club is prime frontline real estate on the beach front of Playa de Las Americas, Tenerife. The prices initially were advertised from €145.000 for a studio apartment with a pool view, through to €253.600 for a 2-bedroom apartment on the ocean front.
In a deal promoted by Mark Cushway the CEO of Silverpoint Vacations SL (“Silverpoint”) and structured by then COO Diana Aitchison, Silverpoint told investors that Palm Beach was “in a transition process whereby the existing timeshare weeks will be put back into full title within a maximum period of three years”. They could “invest in a three-year guaranteed rental programme with the view to resell after a period of time, continue with the rental partnership or keep and use the ownership for holidays”.
What were investors actually buying?
In practice what did this mean? At the outset investors could not pay for their apartment and receive a title deed. Instead the legal form of the investment involved purchasing share capital in a Spanish SL company, each company in turn holding 52 certificate weeks i.e. 52 timeshare weeks. Accompanying this was the promise from Silverpoint that a title deed for each apartment would be obtained within three years.
Until investors received a title deed for their apartment they would “receive 4.5% net guaranteed yearly return on the price paid for the company”. In addition, there would be “8 weeks holiday at disposal of the owner to either use in Palm Beach or within any of Silverpoint anchor resorts in Tenerife.” There would be “no fees to pay such as maintenance or exchange/booking fees or yearly membership fees”.
Investors were told “This is a GUARANTEED DEAL. Should full title not be achieved after the initial 3-year rental period, investors are guaranteed a full refund of all of the price initially paid, still keeping the rental return and having enjoyed 24 weeks free holidays. The 4.5% net rental is also guaranteed to be paid out every year until title is achieved”.
What´s going wrong at Palm Beach Club now?
In a letter sent to investors on the 22/05/2019 investors are told by former Silverpoint COO Diana Aitchison that “during 2018 it was unable to honour the main obligations it was bound to, and it was unable to pay the sums arising from the rental program or to bring about to any extent the conversion of the holiday certificates into the relevant apartment despite assurances that at the last time we communicated with you that it would be within a period of four months”.
So, after five years investors still don´t have a title deed, neither the returns they were “guaranteed”. The CEO of Excel Hotels & Resorts SL “Excel” is none other than… yes you guessed it -Diana Aitchison. Diana writes to say that “Excel” has taken over as administrator of each of the SL companies and that shareholders will receive a new proposed rental contract with Excel to replace the one with Silverpoint. Noteworthy is the fact that “the new proposed conditions will not extend as far as those of the old agreement”. Unsurprisingly investors are very angry with what is happening.
What can investors in Palm Beach Club do?
The Nordic Consulting CI has appointed an experienced legal team who have submitted multiple lawsuits in the courts in Spain on behalf of investors in Palm Beach Club and other similar products involving the purchase of company participations from Silverpoint. Many judgements have declared the contracts “null and void” and have ordered the repayment of monies along with legal costs and interest. Judgements have even gone as far as awarding double the amount paid.
With rumours of Silverpoint´s imminent bankruptcy circulating, starting legal action as soon as possible could be very advantageous. If you have invested in Palm Beach Club, make sure you contact Nordic Consulting as soon as possible to find out your best course of action.