It appears that Ms Cole, working on behalf of Mr. Foster and the directors of the Indies Suites, is running a public relations campaign using the press.
My wife and I are Indies Suites Club members who are supporting the legal action. To date, out of respect for the legal process, I have refrained from speaking my opinion in any forum.
Now with the publication articles and the recent Court of Appeals decision, I feel compelled to speak out.
Perhaps the best way to do this is to reiterate some of the points made by the Court Appointed Joint Official Liquidators in their August 5, 2005 First Report to the Creditors.
It should be noted, that without the legal action undertaken by our group on behalf of the Indies Suites Club members, there would have been no impartial examination of the circumstances surrounding the sale of the Indies Suites.
The Liquidators reported that the ‘timeshare owners may have been deliberately misled regarding the future of the hotel.’
‘Specific negotiations commenced with the eventual purchaser soon after Hurricane Ivan hit in September, this being several months before the insurance claim was finally negotiated.’ The timeshare owners were not informed of the sale until May 31, 2005. One might speculate that the sale would have been compromised or at least delayed if there were complaints from the timeshare owners.
As regards the matter of insurance, in 2002 the Indies Suites management made a ‘conscious decision to half the property insurance coverage from $4m down to $2m.’
‘This significant under-insurance resulted in a claims settlement being obtained of only $1.125m’. Is it possible that Mr. Foster and the directors of Indies Suites, being well aware of this in advance, knew that there would be insufficient insurance to restore the Indies Suites and sought a quick sale?
The Liquidators concluded that the ‘Company has breached what are significant contractual obligations to the owners’. Under the ‘Rules of Indies Suites Club’, Article V(n), ‘Destruction and Unavailability of Club Facilities’, the Company was obligated to ensure that all facilities are covered by insurance in amounts adequate to ‘replace them in the event of destruction’. Further, in the event of destruction or damage, the Company ‘shall contract to restore or repair the Facilities within a period not exceeding two years from the date of destruction’. Both of these obligations have been irretrievably breached.
Now, let’s consider what happened to the money from the insurance settlement and the sale of the property. The Liquidators determined that of the $1,778,619 recovered, $1,658,619 was paid to Brac Ltd in repayment of a ‘loan’.
The Liquidators, based on their investigation, assert that ‘Brac Ltd is the holder of 100 ordinary shares in the Company and it is believed to be, at least, part-owned by Mr. Ronald Foster. The Liquidators report states that ‘Despite the fact that no such debt to Brac Ltd has yet been evidenced, the JOLs main concern is that this purported amount of indebtedness, including amounts paid earlier, equals total available proceeds of the property sale (net of repayment of mortgage balance), and the $1,125,000 insurance settlement proceeds (less $120,000 of payments made to dismissed employees and trade creditors).’
The quote from Mr. Foster in this article is interesting:
‘I hope to settle the claims so that members can get 100 percent of the money that is being held by the court,’ said Mr Foster. ‘I don’t want (timeshare owners) to think of this as a loss.’
It seems clear to me that without the legal action brought on behalf of the Indies Suite Club members, there would be no money being held by the court.
The issue in my mind is not about being compensated for my membership as a Cayman Net News article reports:
‘One club member, Dave Evans of Ormond Beach, Florida said that it is unrealistic for timeshare owners to expect to be fully compensated for their membership.’
The issue is about being adequately compensated for breach of contractual obligations. If the assertions of the Liquidators are accurate, the circumstances surrounding the sale of the Indies Suites does not appear to me to be a model of good business practice for the Caymans.
My wife and I would be interested in hearing the Directors of Indies Suites and Mr. Foster’s answer to these assertions in Court.
Phil and Dori Whitehurst