Pelican Tenants Association “on the brink” of summary proceedingsPOSTED: 02/23/11 11:59 AM
St. Maarten / By Donellis Browne – The Tenants Association of Pelican Resort Club (TAPRC) is on the brink of filing summary proceedings against Simpson Bay Resort Owner Company (SBROC) for what they consider a loss of their timeshare rights. This was confirmed Tuesday by Curacao based attorney Gerrit van Griffen, who’s representing the displaced owners.
The basis of the potential suit is that the timeshare owners still have a claim to their timeshare rights and that any owner of the resort property has to honor those rights. They believe that by closing the resort the new owners – SBROC – are in contempt of the contract and they have grounds to sue.
“We are busy at this moment investigating how a closure is possible, because when my clients owned the resort, they were able to keep it open and were made to understand that it would never close. They therefore consider the recent action as being hostile and they don’t understand why the resort had to close,” van Griffen said.
Though he believes enough evidence to sue SBROC and win van Griffen said they prefer to settle out of court, by having the resort reopened. They are also taking their time to come to a full understanding of what precisely led to the closure.
“My clients find it unbelievable that the new owners say they cannot run the resort with the current liabilities. They also say that the sooner the resort reopens, the less likely it will be that this matter ends up in court,” van Griffen said.
As part of his investigation, on behalf of his client, van Griffen will contact SBROC’s attorney Jairo Bloem at the latter part of the week. Parties have been unable to have in-depth discussions thus far because Bloem is off island.
SBROC and Bloem have long posited that years of the TAPRC, which used to be the owner, not accepting professional advice is what led to the December 16th auction. Their latest assertion of this was placed on http://www.simpsonbayresortnews.com/news/owner-simpson-bay-resort-marina-remains-committed-operating-resort/. One of the core points is that the TAPRC refused to raise the annual maintenance fees as a way to create more revenue to cover the “high operational expenses, low employee productivity and inadequate revenue to sustain it.”
“It should be further noted that employment salaries and benefits constitute a disproportionate expense of approximately 50% of the resort’s operational fees,” the statement posits.
Because of their not listening, SBROC said, the TAPRC allowed the resort to run at a structural deficit and consistent borrowing to meet the resort’s commitments.
“For the last 13 years, Pelican Resort Club has been borrowing money to cover budget short falls as a consequence of its high operational expenses and unrealistically low maintenance fees. The new owner of the Simpson Bay property is the same lender that Pelican Resort has been borrowing money from for many years so that the resort could keep its doors open,” SBROC’s statement said.
That “commitment” to keeping the resort open continued after the December 16th auction and led to negotiations to also retain as many employees as possible for socio-economic reasons. Negotiations then began and continued unsuccessfully and the matter of the labor situation ended up in court. The judge ruled in favor of the employees and SBROC said that left them with judicial and other costs that forced them to close the resort on February 20th. The additional costs from complying with the verdict will reportedly lead to a deficit of US $8 million on the resort’s budget for 2011 and prompt a return to the old strategies, which the new owner does not consider healthy.
“The general public should know that the resort is presently running with 55 workers employed by the new operating company and approximately 120 service providers working four days per week. Previously, the resort was running under the old owner with 200 full time employees of Pelican Resort Club, The Management Company N.V. and approximately 90 additional service providers working four days per week. One should ask oneself how it is possible that the resort can function in peak season perfectly with the amount of people that are currently working there. The answer is simple. More employees are not needed. This means that the resort can operate effectively and efficiently with closer to 100 employees, versus the 182 employees the Windward Islands Federation of Labor (WIFOL) is demanding the new company hire,” SBROC asserts.
They assert further, “The simple reality is that no one, except for the new owner, has been willing to invest the large sums of money in the Pelican Resort Club required to keep it in operation – including the timeshare owners themselves, who’ve enjoyed annual maintenance fees that are on average 30% less than neighboring timeshare resorts. It is easy to sit on the sideline and throw stones when one does not have a major investment at risk and is unwilling to aid the resort by reaching into their own pockets, but the new owner, having already invested millions into the resort prior to the Dec. 16th auction, does not have that luxury. In order to operate a financially sound and secure business one must be able to pay its debts and expenses. The new owner has simply not budgeted for and does not have the financial recourse to pay the unforeseen liabilities and deficits. In addition to these mounting debts are years of deferred maintenance that the previous owner, TAPRC, was unwilling to pay for and which must now be addressed.”
Near the end of the internet post SBROC management apologizes for the stress placed on both the employees and timeshare owners whose vacations have been and will be affected by the closure and express hope that a solution “will be brokered between all respective parties that will allow it to commence operation of the resort in a financially responsible manner.”
“The new owner deeply regrets the stress the situation has caused for the workers of the previous owner as well as the timeshare holders whose vacations will be affected, but it simply cannot operate the resort at a loss without any strategy or ability to reduce its budget deficit and increase productivity in the foreseeable future. The new owner is also distressed by the impact these events have had on the people, business owners and government of St. Maarten. The new owner will continue to strive toward a solution to bring down expenses to a reasonable and manageable level, to increase efficiencies in labor and utilities, and to attract additional financing to pay for the expenses in a responsible manner. The new owner will keep the General Public apprised of its efforts as having a viable operating resort is ultimately in the best interests of all,” the statement concludes.