PHILIPSBURG--The Court of First Instance will rule in two summary proceedings concerning the Caravanserai property in Beacon Hill on Friday, August 8.

 

On Tuesday, the Court heard an injunction filed by International Financial Planning Services (IFPS) to halt the auction of the resort, because it claims ownership of the part of the property where Dunes Casino is located.

Three days later, the Court dealt with another injunction filed by Bank of Nova Scotia (Scotiabank) against Kildare Properties Ltd. and its statutory owner Haresh Manek.

 

An injunction which was simultaneously filed against Country St. Maarten was withdrawn at the last moment, attorney-at-law Pieter Soons announced Friday morning.

 

Scotiabank wants to auction off the entire property, as Kildare had failed to meet its financial obligations to the Bank on a mortgage amounting to some US $14.2 million, including interest and costs.

 

At a first auction, held February 12, the property was priced at US $20 million, but there was no buyer. A second auction, held April 3, against a reduced price of $16 million also did not lead to a sale. A new auction has been set by notary Tjon Ajong for Wednesday, August 13, with a "reserved price" of $12 million.

 

According to Scotiabank, Kildare and buyers of so-called "deductions" have repeatedly tried to thwart and prevent the auctioning of the Bank's mortgage rights.

 

The court case involves the property's ownership. According to the Bank, Kildare had tried to illegally, and without its permission, alienate long-lease rights on parcels of property.

 

This happened on three occasions. On March 29, 2011, a piece of property on which the casino is located was transferred for $1.5 million to International Financial Planning Services (IFPS).

 

On June 22, 2011, long-lease rights on a lot were transferred to NHKK Enterprises Ltd. against payment of $130,250, and a third plot was transferred to Fralexia Ltd. for $1,050,000.

 

As a consequence, the Bank is stating, it is having difficulties selling off its rights of mortgage on the resort. "Failed transactions, the injunctions and Kildare's opposition have caused uncertainty among potential buyers. Because of this, the two auctions were unsuccessful, despite the fact that the reserved price during the second auction was (much) lower than the appraised auction value. The Bank has now once again lowered its reserved price and is expecting to execute its mortgage rights undisturbed," said Soons.

 

Scotiabank fears Kildare may increase the "nuisance value" even more, for instance, in trying to split even more long-lease properties and sell these to third parties.

 

According to the Bank, it has to sell the leasehold rights as soon as possible because Kildare's debts are increasing by $100,000 per month.

Scotiabank felt compelled to prevent the untimely closing of Caravanserai, and is, therefore, paying the "running costs" to keep the resort open. The costs include salaries and insurance premiums, it was stated.

 

In the injunction, the Bank requested the Court to forbid Kildare and Manek to cooperate with the passing of deeds leading to the split and or transfer of long-lease rights and the change of long-lease conditions, such as an increase of ground-rent charges.

 

In case of non-compliance, Scotiabank requested that the Judge impose a $20 million penalty for each violation.

 

Kildare rejected the Bank's claims. The company has been the owner of the Carvanserai property since 1996. It had negotiated several bank loans, for which the land was given in property to finance the construction of a hotel and apartments.

 

"However, the loan did not prove to be sufficient to finance construction. Finishing the complex was a priority. The value of the underlying plot would increase through building activities on behalf of the hotel and the apartments. At the time, the Bank also indicated that Kildare had to sell real estate. Caravanserai in fact consists of several different buildings and apartments, which could be sold separately when split off the three main plots," attorney Tony Engelsma explained.

 

Kildare started with selling the casino and also sold and delivered three other plots to IFPS, Fralexia and NHKK. Kildare denied that this was done without the Bank's permission and approval.

 

Kildare claimed that the mortgages were transferred and approved according to the rules and rejected the damages as being "exorbitant."

 

(The Daily Herald)

 

In this case International Financial Planning Services (IFPS) is represented by attorney Willem Nelissen of Lexwell Attorneys. Kildare Properties Ltd. is represented by attorney Tony Engelsma of Lexwell Attorneys.

Bank of Nova Scotia (Scotiabank) is represented by BZSE Law, attorneys Roeland Zwanikken and Pieter Soons.