Investors in collapsed overseas property firm Harlequin Property may not have valid claims against the company as the joint administrator reveals outstanding debts even without investor claims are expected to hit almost £90m.
Harlequin Property, the trading name of Harlequin Management Services (South East), is an unregulated firm that sold investments in luxury resorts in the Caribbean and elsewhere, with some clients investing in Harlequin through their Sipps. Harlequin filed for administration in April, with Anthony Davidson and Stephen Ryman of Shipleys appointed as joint administrators in May.
In the joint administrators report sent to Harlequin creditors last week, Shipleys says based on information provided by Harlequin directors, unsecured creditor claims are expected to reach £89,128,851.
Of the total money owed, £78m is due to related parties connected with Harlequin, including UK trading companies Harlequin Worldwide and Harlequin Travel, Harlequin development companies, and £147,000 in unallocated investor deposits.
Among the unsecured claims is £4,287,455 owed to trade creditors and an estimated £1m owed to Harlequin sales staff in unpaid commission.
The largest trade creditor is Tailormade Alternative Investments which is owed £484,543. It is part of the same group as Tailormade Independent, a former Harlequin distributor which in March was prevented from carrying out new pensions business by the FSA and was limited in disposing of its assets. Tailormade Independent is still able to carry out pipeline business.
Harlequin directors say the company is owed £86m by other related Harlequin firms, but estimate that only £8,695 in assets is likely to be realised.
In his report, joint administrator Anthony Davidson says he has received “numerous” claims from Harlequin investors, but it appears from the documents he has seen Harlequin “only acted in an intermediary capacity” between investors and the overseas companies.
He says: “For the purposes of this report, the joint administrators have not recognised these potential investor claims as the contractual relationship is between the investor and the overseas companies.
“The joint administrators are currently seeking legal advice in this matter and will update creditors of this opinion in due course.”
Harlequin investors can still submit their claims to Shipleys pending the legal opinion.
The Financial Conduct Authority issued a warning to investors last month considering paying Harlequin and its associated companies more money, telling investors to “proceed with caution.”
The regulator first issued an alert to advisers about Harlequin in January. The Serious Fraud Office began an investigation into Harlequin in March.