Spanish court appointed administrator completes 14 month review of troubled Canarian timeshare company Silverpoint. The news looks grim for key Silverpoint personnel
Observers also note that the administrator has not included key points which the lawyers behind the majority of legal cases against Silverpoint expected.
In 2020 CEO, Mark Cushway, placed Silverpoint into voluntary liquidation. Immediately suspicions arose that Limora, Silverpoint’s BVI parent company, had taken this action to consolidate financial gain for the family of the late Bob Trotta, owners of Limora
Seemingly in agreement, the administrator has reported that the liquidation could have been avoided but for the mismanagement by the company directors and key personnel.
Despite the administrator reporting the role played by Silverpoint’s legal advisors, they have not been held accountable.
If the bankruptcy could have been avoided, which bad advice was received, and from whom?
Alvarez & Marsal
Cayman Islands based Alvarez & Marsal (AM) are large bankruptcy practitioners with a track record of liquidating timeshare companies, such as disgraced Maltese company Azure.
AM’s modus operandi is to extract wealth from the companies before declaring bankruptcy. They are known for asset decommissioning (or asset stripping) which is the practice of taking over a company in financial distress and selling off its assets, regardless of the impact on the company’s sustainability.
In every Alvarez & Marsal timeshare related bankruptcy, MD and qualified Cayman Islands insolvency practitioner Alex Lawson is heavily involved.
Kwang Boon Sim
Kwang Boon Sim was integral to the late Bob Trotta’s financial dealings. Alvarez & Marsal’s team, led by Alex Lawson and assisted by Kwang Boon Sim, have been working their way through of network of 123 companies comprising the Limora Group, taking over the liquidation process and then declaring those companies insolvent. Lawson and his team are in the unique position of being able to evaluate each company’s ability to pay its debts and declare that they are unable to do so.
The insolvency of each company is ostensibly for addressing debts to other companies controlled by the Trotta family. The aim of these insolvencies however seems to be to avoid liability to consumers. The Trotta family (via their trust fund) keeps the cash by failing to deliver on liabilities to said customers. Alex Lawson and Alvarez and Marsal extract hefty fees along the way.
Kwang Boon Sim was not an employee of Silverpoint but was recognised by the administrator as having had significant influence in the company.
The court appointed Silverpoint administrator also uncovered financial and management irregularities which contributed to the collapse of the company. Because of this, he has classified the liquidation as “culpable”, meaning it was a negligent bankruptcy.
The Silverpoint administrator reported that those responsible for the negligent bankruptcy are former CEO Mark Cushway and former CFO Diana Aitchinson.
For Cushway and Aitchinson this may be a concern as the administrators report raises the possibility of criminal charges being brought against them. Observers may wonder why Alvarez & Marsal are not also mentioned in this regard; as they were instrumental in the winding up the company.
The administrator also cited “dubious” transactions between Silverpoint and Excel, another Limora company.
Lawyers representing claimants have formally requested that the liquidation of all other Limora Group liquidations be investigated, hopefully increasing the overall asset value of the liquidation process.
Limora Investments ltd
The parent company of the Limora Group is BVI registered “Limora Investments Ltd”
On the 23rd May 2019 Limora Investments Ltd filed for Chapter 15 Bankruptcy proceedings in Southern District of New York. Predictably, Alexander Lawson (along with AM colleague Paul Pretlove), appeared as the foreign representatives of Limora Investments Limited.
For foreign creditors that fact this is a Chapter 15 bankruptcy may mean they have more chance of achieving satisfaction, as Chapter 15 allows for cooperation between US and foreign courts
This bankruptcy may put all 123 Limora Group companies at risk, and is a significant action for everyone involved: employees, creditors and clients alike.
A full chart of the 123 Limora Group companies can be downloaded from here:
Whilst the administrator’s report is good news for claimants, it was hoped the administrator would have gone further. If the Limora Group had been examined in more depth, it could have revealed corporate asset stripping of Silverpoint through other entities within the group
Previous investigations carried out by the Spanish Social Security office highlighted the link between the various Limora companies. Ideally the results of this investigation could have featured in the administrator’s report.
Regarding Silverpoint, the Spanish State Attorney will study the administrators report in detail and then make his comments for the presiding judge. This report along with the criminal reports launched by Spanish lawyers for allegedly hiding/removing funds and assets in order to obstruct payments to clients during enforcement procedures. This is known as “frustration of payments” and is a criminal offence.
While there is some way to go, the settlement of legal claims awards against Silverpoint and associated companies moves a step closer.
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First published on MyNewsDesk July 2021