Pelican Tenants Association “on the brink” of summary proceedings

POSTED: 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.
Closure Justification
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.

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Comments (5)

 

  1. Jeannine McCoy says:

    If SBROC thinks they were operating the resort adequately with 55 workers, they should look at the reviews on TripAdvisor.com for the weeks prior to the closure….clearly there were not enough staff. A service oriented business requires that a large percentage of the expenses are for personnel.

    The paper’s characterization of owner concerns as “what they consider a loss of their timeshare rights” is disturbing for the individuals who have made what they consider a “major investment”…paid for timeshare weeks they are supposed to OWN…it IS a loss of rights that might make others think twice before investing in timeshare property on St. Marteen.

  2. Dave in DC says:

    Nice job of providing one side of the story! Are you on the RR payroll as well?

    How about questoining why RR ran the place with almost 200 staff for 13 years without ever saying “this is too many” or “we need to make some layoffs”? Since 1997 Royal Resorts (the “professional” management company) has had primary responsibility for formulating realistic annual budgets, up to and including, complete control and responsibility for the labor management and collective labor agreement (CLA). If the new owner believes the resort can now run with almost 100 fewer employees than when the TAPRC owned the resort, then shouldn’t Royal Resorts be held responsible for the overstaffing at the Resort for the last 13 years and the deficits thereby created?

    Why not ask why RR moved all the money to an account in Belize and gave themselves sole access to it so the board could not pay bills when RR refused. THERE WAS MONEY IN THE ACCOUNT, RR REFUSED TO PAY THEIR SISTER COMPANY QIT OUR MORTGAGE PAYMENTS AS DIRECTED THUS PUTTING THE FORECLOSURE IN MOTION AS PLANNED.

    Notably absent from the facts presented by the new owner is that Royal Resorts had gone so far as to open numerous bank accounts (in direct violation of its Management Agreement) in other countries such as Belize. Opening these bank accounts was analogous to identity theft; numerous accounts opened in the name of the Resort, with no one on the TAPRC Board with signature authority over any of the accounts.

    How can the board pay the mortgage when they have no access to the funds?

    Why not ask why Corso paid himself from the equity fund even though he was told not too by they board. Not a single owner was paid what they were owed buy Corso or RR…ONLY CORSO GOT PAID!

    30% less than neighboring timeshares is a spin that manipulates facts to RR and QIT’s needs. The new owner’s statement that the maintenance fees at the Pelican are unreasonably low, allegedly 30% lower that the neighboring resorts, again misrepresents the facts. For the last 13 years the fees at the Pelican are, and have always been, comparable with the other resorts on the island. Even in the case of its two neighboring resorts (The Flamingo and The Royal Palm) the 30% increase in maintenance fees at thier properties occurred during the last two years as a result of particular circumstances unique to those two resorts.

    WHY MUST I PROVIDE REBUTTAL TO SEVEN PARAGRAPHS OF LIES WHEN IT IS YOUR JOB TO INVESTIGATE? Is this really your idea of fair journalism and fact telling?

  3. Brian in Canada says:

    Wow Dave did you hit the nail on the head! in all cases most especially with regards to the lack of objectivity on behalf of the newspaper. Did someone miss their journalism 101 class?

  4. PJ says:

    Have a look at the St Martin’s Week website and reference HOTEL NETTLE BAY BEACH club closure SEPTEMBRE 2004….REFERENCE: SOCIAL:’ AFFAIRE DE L’HOTEL NETTLE BAY BEACH’ 25 February 2011
    this is an incredible story and where I am too personnaly involved as the’residence’ we live in has never been repaired since 1987 when the owners who are notaires supposedly bought it and was part of the same hotel complex. Here also like in the Pelican Saga we have had TEN different so called landlords but who are really the same sheep in wolves clothing collecting rents and not declaring them… Now the Justice has finally been served for EIGHT employees who just did not give up and won!
    SEPTEMBER 2004 HOTEL NETTLE BAY BEACH CLUB as the article states..brutally closed its doors without any notice to its employees.Despite the Inspector of Work and UNIONS nothing happened. However EIGHT employees did not give up and pursued the ‘owners’ through the court system of FRANCE>>> they won! 02 FEBRUARY 2011 they won their case and now have to be paid…This is a case that needs to be translated into English for all the Pelican employees to use… The workers at HOTEL NETTLE BAY BEACH CLUB are STILL employees even though the Hotel is closed, SEVEN years later but as the article ends… its a bitter sweet victory as many of those employees have had eviction from their apartments, health problems, financial troubles and many still unemployed. the UNION leader wrote :Many employers on St Martin don’t respect the legislation and she asked that employers respect their responsabilities”
    So it is on BOTH sides of the island<
    HOTEL NETTLE BAY BEACH CLUB was used as part of the tax benefits for investors. Companies in France and on St Martin.
    September 2004, the units were sold as apartements but now who will pay those employees what they are due since 2004?

  5. Yolande Michaud says:

    Dave, I agree with every single one of your comments! Thank you for taking the time to write what I as an owner know to be true.

    Brian from Canada – I have read several blogs where the writer is providing false information…

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