A trust designed to safeguard the assets of investors in troubled overseas property company Harlequin is on course to be set up by the end of January 2014, the company has said.
Some 3,500 investors have signed up to the planned trust, which Harlequin has said "represents the option that will give the Harlequin investment the best chance of success whilst protecting investors' interests".
Harlequin - which has taken about £400m from investors to invest in properties across the Caribbean - has been rocked by problems since the start of the year, including three warnings by the regulator, investigations by the Serious Fraud Office and the Insolvency Service, and its sales arm going into administration.
Building work has stopped on several of the complexes it invested in, meaning investors, who only realise a gain once the planned villas and hotels are fully operational and are being stayed in by paying customers, have been left in financial limbo.
In a bid to regain the confidence of investors - and encourage them not to pursue the company through the courts for the return of their money - Harlequin has been working with law firm Regulatory Legal, which represents hundreds of those with money in the scheme, to create a trust which would hold a charge over the land bought by Harlequin for development.
An investors-backed trust structure will lift the threat of legal action against Harlequin and allow it to seek third party funding to re-start building work on the land.
In order to join the trust, investors will be required to pay a fee of £200 plus VAT to Regulatory Legal. A further fee of £50 per annum will be due for each year that the trust is in operation. Harlequin has said that investors will not be charged any other fee.
Members of the trust would be represented by selected trustees, who would be chosen based on their skills and experience relevant to hotel development.
Regulatory Legal is currently preparing the trust documentation to send to investors. Once these papers have been signed and returned, the law firm has said it will begin due diligence on Harlequin's assets.
The trust will be independent of Regulatory Legal and Harlequin.
'Failure to pay attention can result in enforcement'
200,000 LISAs opened so far
From June 2019
11 years since launch of three Chartered titles
Hired 200 extra operational staff