Criminal investigation of Silverpoint and Excel Hotels and Resorts is announced
Arona's Investigating Court Number 1 has opened preliminary proceedings against Silverpoint Vacations SL (“Silverpoint”) and Excel Hotels & Resorts SA (“Excel”). The alleged crimes relate to the bankruptcy of Silverpoint, the timeshare giant that centred its operations in the south of Tenerife.
Silverpoint had been losing hundreds of court cases related to mis-selling timeshare products, and went into voluntary liquidation in February 2020. Hundreds of investors, many of them elderly pensioners, lost their life savings, while it appears that their money was moved to other group companies, many of which were based offshore.
Significant assets of Silverpoint were transferred to Excel before the insolvency was announced. The Prosecutor's office is alleging crimes including punishable insolvency, frustration of execution, and procedural fraud.
Concealment of assets:
One of the potential crimes is “alzamiento de bienes” or concealment of assets. This crime makes it hard for creditors to find assets with which to cover their debt. It appears that millions of euros of assets including timeshare weeks and apartments were removed from Silverpoint shortly before the timeshare giant filed for bankruptcy.
One of the main recipients of these assets was the resort management company Excel, formerly known as Silverpoint Hotels & Resorts SA. Several related resorts, including Beverly Hills Club, Beverly Hills Heights, Hollywood Mirage and Palm Beach Club, are still managed by Excel.
The Specialized Unit in Economic and Fiscal Crime of the Spanish National Police has already prepared an extensive report on the links and participation of both companies in the alleged criminal acts.
Apparently, Silverpoint and Excel settled a “simulated” lawsuit between themselves in March 2018, when Silverpoint recognized an alleged debt with Excel and promised to pay it off by transferring "a very significant part, if not all of its corporate assets". These assets included 7,347 certificate weeks, the long-term client portfolio, and a promise to pay them 6.7 million euros.
The investigating judge has already ordered that information related to the assets of both Silverpoint and Excel, as well as all contracts between the two parties, be collected. She is taking this action, because, according to the prosecutor, these companies acted "in collusion" as part of a plan to avoid paying awards from court sentences. The investigation may also eventually expand to include the advisors of Silverpoint, Excel and its related companies.
Silverpoint filed for bankruptcy in December 2019 and entered directly into liquidation on the 1st February 2020. At the time of the filing, the companies declared assets totalling 14 million euros, and its debt was estimated at €28 million. However, the bankruptcy administrator´s report indicates that the company has assets of 83 million euros and liabilities of €141 million, largely debts corresponding to court awards to former clients.
In addition to the liquidation in Spain, a procedure for the bankruptcy of parent company Limora Investments Limited has been running in the Southern District of New York Bankruptcy Court. This process has highlighted how the complexes in the south of Tenerife were the main source of income for a huge corporate network of companies stretching across tax havens including Dubai, The British Virgin Islands, Panama and Malta. It appears that the Limora Group used these shell companies to transfer assets around the world, making it difficult for the Spanish authorities to recover assets.
In Spain, the situation is different, and it is hoped that the Spanish investigation into assets transferred to Excel will recover close to €8 million for creditors. Miguel Rodríguez Ceballos, head lawyer for The Nordic Consulting which represents many Silverpoint investors, comments “for many years Silverpoint lost in court, but then failed to pay the court awards to its former clients. They also failed to report the assets which the courts were trying to seize. We hope that this investigation will stop those responsible for the collapse of the timeshare giant from hiding behind ´the corporate veil´ and that assets can be recovered.”
It is also hoped that those responsible will be punished for their actions and that the criminal prosecution will help clean up the tarnished image of the resort holiday industry in Tenerife.
To find out more, please contact The Nordic Consulting on:
English Tel: (+44) 207 183 4136
Spanish Tel: (+34) 822 684 556