11 July 2013 @ 07:56
Hacienda Riquelme Golf Resort
President’s Newsletter – June 2013
Regrettably, this newsletter is going to concentrate on some of our financial challenges.
Your committee continue to
strive to work with Resortalia to manage costs and optimise revenue from
our debtors but are unable to report success in one key area.
Polaris World.
As we
all know, PW are in dire financial straits. In discussion with them, it
is acknowledged by PW that they are not able to pay their creditors, of
which we are one but they continue to insist that it remains their
intent to pay all our community fees. It is a fact that sales at
Terrazas de la Torre are buoyant so it just may be that they are
starting to see some net revenue which would enable them to make good on
their promise.
The word on the street is that a
number of creditors have initiated Court Action against PW whose
response appears to have been that they will see the creditor on Court –
which is likely to be in five years’ time. In the meantime, the
creditor’s account sits at the bottom of the list for any potential
payments so the net effect is that the creditor has fronted up legal
fees and taxes which have no chance of reaching any beneficial
conclusion for five years. Of course, the creditor has the feel good
feeling that they have initiated Proceedings – but that is it.
Then, of course, we have to consider that even when we win our claim, would PW have the wherewithal to pay us?
This is the position we are in.
We can either continue to communicate with PW and hope that if and when
funds become available, they will pay us rather than anyone else or we
can initiate Proceedings which may or may not yield a positive result in
five years’ time but we will have to throw good money after bad to do
it.
It may be that by taking Action
we eventually force the sale of PW’s assets here on HR – and the sooner
the better as the new owner will have to pay the last two years
community fees. If so, this is a positive reason for initiating Action.
But – it is conceivable that the banks will foreclose on those assets
long before the Courts get around to forcing their sale so we would have
incurred the legal costs for no return.
At our last committee meeting,
in applying the thoughts outlined above, the committee decided to
suspend any decision on suing PW for the debt pending the promised June
payment. We will, of course, be monitoring the situation very carefully
but can assure you that despite some opinions, we are not sitting idly
by and simply doing nothing.
Bluntly, our options are limited to:
Do we sue and send good money after bad? or
Do we continue our discussions with PW?
Throughout my business career, I
had a philosophy that I would only ever go in to a battle that I knew I
would win. If I did not think I would win, I sought an alternative
solution. In these circumstances, I think that any ultimate result would
be a pyric victory so, personally, I have no desire to commit our
community to prolonged and costly Proceedings.
Other debtors
We
used to contract a company called Community Fees Ltd to collect our UK
and Irish debt but for some time have been concerned about their
abilities. Accordingly, we have approached to alternative debt
collection partners in the UK and I am delighted to report that initial
impressions are very favourable.
In the first instance, debtors
will hear from a company called CCDR who will endeavor to negotiate
payment of the arrears including costs and surcharges. Normally we will
accept payment plans that yield the full amount of the outstanding debt
plus all current payments within an agreed period.
If the debtor will not enter in
to such an agreement or defaults on it, we use a firm of solicitors
called Welbeck Law to go to the UK Courts to gain an European Order of
Payment.
We understand that some owners
have made payments to CF Ltd which C F Ltd have not advised us about and
have not forwarded to ourselves so we have initiated Proceedings
against them through Welbeck Law. If you have made any payments to
Community Fees Ltd , please check with Resortalia to ensure that we have
received them. If we have not received them, we need evidence of the
payment so that this may be added to the claim against C F Ltd.
We make no apology for taking a
hard line with debtors and are actively considering how we may go about
forcing the sale of debtor properties. We know we are unlikely to be
paid out of a forced sale but at least the new owner will have to pay
for the last two years’ debt and we will have stopped hemorrhaging funds
as the old debtor continues to default. And, yes, we are considering PW
in this option.
MC will provide the quarterly debtor report after the July committee meeting
Cash flow
Because
of the decrease in revenue due to the increase in debtors (PW being by
far the largest) we are generating substantially less cash than was
forecast. Accordingly, we have embarked on an austerity program and are
only spending on existing contracts plus essential repairs to maintain
our security and infrastructure. Although we budgeted for 100,000€ for
long term repairs and renewals, our cash flow means we would be “unwise”
to consider committing to expense when we cannot be sure that we will
receive all our budgeted revenue.
Holidaymakers
June,
July and August are the months when those owners who rent their
apartments seek to optimize their revenue so that HR resembles a holiday
resort.
Unfortunately, too many
holidaymakers are attracted by some of the extremely low rentals that
can be had here but who do not understand that apart from the golf
course, there is little else to do. If the holidaymaker does not have
access to a hire car, their options are decidedly limited.
We have already had a serious
incident when one of a group of teenagers renting a second floor
apartment apparently tried to jump off the apartment wall. He failed to
walk away from his misguided attempt. This same group had earlier been
smashing glass on to the road and had an altercation with our security.
If you rent, please make sure
that your tenants understand the limitations of our facilities. HR was
designed as a 5* golf resort and is just not suitable as a general
holiday resort.
Our owners and renters must also
appreciate that they have no rights to enter the golf course area,
which includes the buggy paths unless they are actually playing the
course. Any unauthorised
person who is on the golf course is trespassing and there at their own
risk. If they, or worse, their child, are hit by a golf ball, they would
not be covered by insurance and the golfer would have no liability for
the injury.
Phase 7 storage area
Owners
on Phase 7 are understandably upset about how the storage area is being
used by contractors which causes them varying degrees of nuisance
depending on their position. Successive committees have recognized this
and endeavored to improve matters for Phase 7 but, regrettably have had
little success. It would appear that some Phase 7 owners believe that
the committee does not care about this issue but nothing could be
further from the truth.
The problem lies with the issue
that there is nowhere else for our contractors to use that is remotely
as effective as the storage area. The alternative areas for contractors
to use are both outside our perimeter so would need to be secured before
they could be used. One of these areas is adjacent to the pump house to
the left of the road to Sucina and the other is outside our security
fence opposite the end of Phase 6. We understand that both these areas
are owned by PW or IRM so the golf course machinery could be moved to
these areas but our gardeners would have no right to use these areas.
This would mean that we have nowhere for our gardeners to base
themselves.
Moving these operations will
involve costs which, eventually, would be passed through to us – either
in increased golf course costs or increases in gardeners’ costs.
For these reasons, the majority
of the committee has not been supportive of the idea to force the
contractors to move although we have tried to have the contractors
reduce the nuisance of the storage area and to reduce its adverse visual
impact.
Some owners on Phase 7 have now
had enough and are taking matters in to their own hands by initiating
legal action to have the contractors removed. The majority of the
committee is not prepared to support the action because they believe
that such an action would not be in the best interests of the HR
community as a whole.
We should also have a concern
that the golf course is owned by a consortium of banks who have no
choice but to take a tough commercial line. They have already told us
that they are making a loss on the HR course with no sign of an
improvement until they can source cheap water. We need to be mindful
that if we push them in to a corner they could choose to close the
course. I have had the benefit of being in communication with IRM so
have a very real fear that this could well be their response so have
this comment to say to the good folks on Phase 7: “Be careful what you
wish for”
End on a high!
I
continue to receive feedback from visiting owners that they are
agreeably surprised at how well the resort has developed since their
last stay. I am fully aware of all the areas that, ideally, we would
like to improve but have to agree that the general look of the place is
better than ever.
The fairways are recovering well
from the outbreak of alien grasses which are now dying back though the
greens have recently been treated so are not yet at their best but look
as though they will be fantastic within a week or so.
NB
President,
Hacienda Riquelme Golf Resort
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