posted 05-31-2005 15:16               

Is there any recovery for club members? - I just had purchased at Indies Suites just before the hurricane and never used! It does not sound like there is any plan to reimburse or partially refund anything back to it's members - UGHHH!! Can I claim a personal loss on my investment? Any advice would be helpful!

I just received the following letter in the mail today:

May 31, 2005 -

The owner and proprietor of the Indies Suites, Mr Ronnie Foster has now confirmed that the hotel property will not be rebuilt following major damage as a result of Hurricane Ivan.

The hurricane severely damaged the Indies Suites property last September, removing its roof and causing major structural and flood damage. The property has been exposed to the elements since the hurricane and further damage has occurred.

All club members of the Indies Suites have been notified of the decision in writing to end months of speculation as to what would become of the hotel. Prior to Hurricane Ivan, the property operated as a hotel and club members had the right to use approximately 20 percent of the available weeks. Due to its size, the facility was never able to operate on a profitable basis and incurred significant operating losses on a yearly basis, which were subsidized by the owner.

The proprietor has spent the past eight months since Ivan trying to settle the insurance claim and obtaining advice from experts, claim consultants, engineers and others on the feasibility of rebuilding the property and once again operating a resort. To date, the insurance claim has not yet been settled.

Unfortunately the capital required for rebuilding and the costs associated with the operation of the facility makes it impossible to operate without incurring significant losses.

The owner has come to the conclusion and been advised that the cost of repairing the facility will be in the millions of dollars and the insurance premiums, if it were repaired and no other natural disasters occurred for a number of years - would still increase dramatically.

These factors, together with the proprietor's inability to carry the existing debt on the facility, have forced the proprietor to dispose of the property on a as it were basis and to incur millions of dollars of losses. Unfortunately the owner could not afford to make the capital injection that would be required and to carry the huge operating losses.

Speaking about the decision, Mr Foster said, "I know that many club members will be saddened by this news. We have not only lost many millions of dollars but have lost an extended family, which has built up over many years. This can never be replaced.

"Hopefully members will remember the very good times enjoyed at the facility over the many years that it existed," he added.

Management & Staff,
Indies Suites Resort

posted 06-01-2005 05:23               

Sorry.

posted 06-01-2005 12:22               

I am particularly angry that, with the effort and funds that we put into restoring our resort after Ivan, that this persons thinks they can just walk away, and lay the blame at anyone other than himself.

Timeshare in Cayman and the Caribbean may be Right to Use rather than deeded, but that does not remove the commerical obligation to abide by the terms of the agreement between the parties.

Contrary to the opinions stated by John Chase, the strength and independence of the legal system in Cayman in fact makes it more likely that pursuit of the developer would succeed than would be the case in many other countries.

This situation needs to be unravelled and, if it turns out (as it looks very much as if it has) that the owner of Indies Suites has "stiffed" the timeshare owners, the full weight of the law should be brought to bear on him personally and on his personal assets.

I believe that some Indies Suites timeshare owners have retained counsel in Cayman to put the company into liquidation (as a first step), this story will take time to tell, but I will be following it closely.

posted 06-01-2005 13:03               

I don't own at Indies...but reading this prompts my sense of right/wrong....

I confess to know nothing about the fine print of the RTU, or Caymanian laws, but a couple fishy things about that article:

a) either the developer had $2.5mm in insurance or he didn't. If he was allegedly 50% underinsured, then he had $2.5mm coverage on a $5.0mm resort....why is he talking about a $1.25mm claim?

b) Why is the insurance company weaseling out of their $2.5mm liability and offering $0.5mm? Why are they not additionally liable for the subsequent damage to the interiors by slow-paying the roof repair claim?

c) Sounds to me like there's $2.5mm capital (from insurance) available to rebuild a $5.0mm resort. Why is that a bad business proposition if the original business model was a profitable developement? (if someone else was eager to buy the resort as is, that's one more vote of confidence for me that the resort isn't worthless.)

d) The TS developer's unsold inventory and mortgage on those unsold weeks should not evaporate the equity of the other owners. Smells like fraud to me. You paid cash for your week(s)....the fact that another owner (the developer included) has mortgaged theirs, should not detract from, nor jeopardize, your property. If it were deeded, I'd add that the bank has only the developer's weeks as collateral; they can't repossess your week and liquidate it to make his loan payments. (not sure about RTU).

e) I can't picture how this new party allegedly came in and bought the resort as is....it wasn't the developers' to sell. He can vote his unsold weeks' percentage...but he shouldn't have the right to confiscate yours and sell it for his own benefit without your vote. Why isn't the new "owners'" title worthless, or at least clouded by all the existing owners?

posted 06-01-2005 14:58               

quote:

---

Originally posted by TomCayman:
Contrary to the opinions stated by John Chase, the strength and independence of the legal system in Cayman in fact makes it more likely that pursuit of the developer would succeed than would be the case in many other countries.

This situation needs to be unravelled and, if it turns out (as it looks very much as if it has) that the owner of Indies Suites has "stiffed" the timeshare owners, the full weight of the law should be brought to bear on him personally and on his personal assets.

I believe that some Indies Suites timeshare owners have retained counsel in Cayman to put the company into liquidation (as a first step), this story will take time to tell, but I will be following it closely.

---

I sincerely hope the owners get something back but I personally wouldn't throw more good money after bad. Any mortgage holder is going to have priority in any claim and the club members sound like they would be unsecured claimants unlikely to see more than a penny or two if anything on a dollar. Having been through a developer bankruptcy I know that the cards are stacked against the "mere" buyers. I doubt they paid too much for this club membership and legal fees could quickly add up to the same amount or more with nothing to show for it. It is too bad that a developer would try to pull a fast one or take the insurance proceeds for himself but the small club owner isn't going to stop that. Lets hope the government and legal systems stop any rip off but I wouldn't count on it anytime soon. In the mean time they are better off moving on, watching what happens from the sidelines and, if a check shows up in five years, be pleasantly surprised.

UPDATE: After reading through many of the messages on the owners site here is the sad bottom line. Lets say they actually did collect $2 million from the developer/owner. Thats not likely as he claims less insurance and there is a mortgage but I'll be generous and say $2M is available. I'm not sure of the number of club owners but lets say it was 5000 weeks total. They'd only get $400 each. Thats the maximum and any actual settlement is likely to be 1/10 of that or less. So if they invest more than $50 toward any legal fees they will most likely be out even more money than they are now with a possible return of under $500 maximum. It simply isn't worth pursuing.

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John Chase
Use Email Icon above for contact address

posted 06-01-2005 17:28               

They are retaining a lawyer to put the wheels in motion.