Reclaim Limited Liquidation

Reclaim customers are promised some form of ‘cashback’ or repayment of part of their investment at the time that they purchase a timeshare. The claim process requires customers to make their claim 51 months after their investment and the form must be posted, or more accurately, postmarked, within a narrow window of ten days. It appears that most customers either forget to post it 51 months later or miss the window for posting. A small number apply successfully but many complain that they do not receive their cheques.

Customers of Reclaim do not appear to be defrauded per se, in the sense that what they are missing out on is a potential ‘cashback’ on monies paid, upon certain conditions being met within narrow parameters, and not a promised guaranteed return on an investment as such. Nevertheless the scheme generates many complaints from dissatisfied customers who feel that they have been misled or defrauded.

In December 2012 the Minister for Financial Services instructed the law firm of Hassans to file for the winding-up of Reclaim Limited on “public interest” grounds. The order was contested by Reclaim Limited. Malcolm Willis a director of Reclaim and Luis Fernandez of Law Abogados Patrimonial SL (“LAP”) filed affidavits claiming that Reclaim had now ceased trading and that the funds are no longer held by Reclaim but by LAP as the “Spanish trustees” of Reclaim. They claimed that as a result of the freezing order on the funds by the Gibraltar Courts they had been unable to pay the Reclaim certificates resulting in a multitude of complaints and for this reason Reclaim should not be placed into liquidation and the freezing order should be lifted.

After a two day trial the arguments put forward by Reclaim were rejected by the Gibraltar Courts which found that Reclaim should be wound up. Reclaim was eventually wound up on 31 March 2014 and Edgar Lavarello (PwC) and Charles Bottaro (formerly of PwC) were appointed Joint Liquidators.

Initially the directors appealed against the Supreme Court’s decision but this appeal has now been withdrawn. The Supreme Court Judge, in finding that the company ought to be put into liquidation, stopped short from declaring that the scheme was fraudulent but he did say that the way it was being operated in practice was tantamount to dishonest manipulation.

The directors of Reclaim are Malcolm Willis and three corporate directors registered in the BVI. The statement of affairs provided by Malcolm Willis shows that the company has no assets and no liabilities and he explains that all of the funds have been transferred to LAP and accordingly Reclaim had ceased trading several months prior to it being placed into liquidation.

Luis Fernandez and LAP have some problem in understanding the Order of 31 March 2014 appointing the Joint Liquidators of Reclaim Limited and what this in fact means and, at present, refuse to accept the terms / consequences of our appointment as Liquidators. Hassans (representing the Liquidators) are in correspondence with LAP who have acknowledged that they hold certain funds but assert that such funds are held for the benefit of the successfully redeeming scheme participants, not Reclaim, but LAP, as noted, refuses to accept the authority of the Gibraltar Courts’ appointment of PwC as Liquidators and / or the implications of the same in LAP’s subsequent obligation to transfer all monies to the care of the Liquidators.

In the meantime we have written to Societe General, Tangiers (SG) where we believe the monies are retained. Preliminary investigations seemed to indicate that the assets held by SG could be in the region of €1.5million to €7.5million but that it is uncertain whether such funds are held in the name of Reclaim or in the name of LAP (or some other company related to LAP).

Since Reclaim has been placed into liquidation we have received a number of complaints from creditors informing us that they are being contacted by a number of other parties, including Victoria Marketing and Bordella Liquidators, claiming to be the liquidators of Reclaim Limited or acting on behalf of the liquidators of Reclaim limited.

These companies all have the very similar methods of operation. Initially they may invite you to a meeting or try to gain your trust by providing you with information and stating that they are here to help you and that you do not need to pay them any money. Once they think that they have earned your trust they will throw in a complication, like an administrative charge or a tax which has to be paid before your funds are released.

None of these companies act for or represent the Liquidators of Reclaim and you should accordingly refrain from dealing with them in any such capacity. If you have any concerns please contact us at the address provided as these companies have no intention of legitimately returning your monies so please do not pay them as they cannot help you in respect to any matters relating to Reclaim.

In recent weeks we have received many emails asking us when we are going to return your monies. This process may take some time and depends entirely on our ability, as Liquidators, to successfully gain access to, and control over, Reclaim’s monies / assets either directly through SG or through the instigation of Court action against Luis Fernandez and LAP to compel them to deliver Reclaim’s monies / assets to us as Liquidators. This process will likely take many months if, indeed, we are at all successful.

Our last update in 2022, advised that LAP and Mr Fernandez had been avoiding service of a judgment that had been awarded to us by the Gibraltar Courts.

We returned to Court in April 2023 to advise that our lawyers (“Hassans”), had eventually been able to serve the order LAP/Fernandez who had failed to comply with it.

The Court’s judgment was handed down on 5 May 2023 and ordered that LAP/Fernandez transmit to the Joint Liquidators the sum of €1.5M and £7.1M. They were also ordered to pay our costs.  

There then followed discussions between LAP/Fernandez's lawyers and Hassans. The outcome of these discussions was that LAP/Fernandez have offered €650,000 in order to settle any claim which we may have against them.

We acknowledge that the offer made by LAP/Fernandez was significantly less than what the Court has ordered needs to be transmitted, however, the reality is that we have spent many years trying to recover funds from LAP/Fernandez and this has proved a very challenging task. Save for some monies received between 2015 and 2016, no other recoveries have been made during the course of the liquidation which has now been ongoing for nearly 10 years and has required us to be involved in a lot of litigation.

Despite our protestations, some payments have also been made by LAP/Fernandez over the years to Reclaim certificate holders which are not insignificant. This appears in the evidence they submitted in the jurisdictional challenge they made but there has never been a reconciliation, or an account provided. So, it is not possible to say how much has been paid to participants and how much they have. As a result, we would need to pursue enforcement of the Gibraltar Court’s judgment in Spain.

We have received advice from Spanish lawyers on this and there is no guarantee we would be able to enforce the Gibraltar court judgment in Spain. The Spanish lawyers view was that recognising a Gibraltar judgment in Spain will not be quick or easy. Furthermore, they believe that it will be complicated to obtain a successful outcome in Spain post Brexit.

The process of registering, recognising and recovering any assets in Spain would involve three separate applications to the Spanish Supreme Court and just the first of those applications, registering the judgement in Spain, may take up to eight to nine years.

The timeline we have been given assumes a limited effort by LAP/Fernandez against our registering the judgement and does not take into account the possibility that they could appeal any decision which was favourable to us and this may easily extend the time period even further.

Having made an assessment of what we can recover financially and having carried out a desktop review of the financial position of LAP/Fernandez we have not identified any significant assets registered in either of their names. The bank accounts we have identified had only very small and moderate cash balances. We may therefore end up with a judgement having incurred significant costs and no assets to recover.

In addition, Hassans and PwC are owed substantial legal fees and PwC cannot bankroll the claim in Spain. We are conscious of the amount of time it has taken to get to this point, the amount of time it will take to enforce the judgment and any legal issues that may arise on enforcement. There is no guarantee we would succeed in enforcing the Gibraltar judgment in Spain.

In the circumstances, receipt of the €650,000 would allow the Joint Liquidators to make a modest payment to the creditors (even if this is just a token) after expenses are paid and then to move towards finally dissolving the Company given that no further assets have been identified.

In order to be able to accept the offer, we needed the sanction of the Supreme Court of Gibraltar. To that end, we filed an application on 13 November 2023, seeking the Court’s sanction of the offer. The hearing of this application took place on 11 January 2024. The Supreme Court of Gibraltar did sanction the Compromise. Hassans submitted that all creditors should be informed of the offer and that creditors should be given an opportunity to apply to the Supreme Court of Gibraltar to set this aside should they wish.

The Order from this hearing provided as following:

(1)    The Court sanctions the Joint Liquidators’ acceptance of an offer made by the Defendants whereby the Defendants shall make the payment (“the Payment”) to the Joint Liquidators of €650,000 in full and final settlement of the Judgment Debt and the Costs Order (“the Compromise”).

(2)   The Joint Liquidators will notify all creditors of the Compromise by close of business on Monday 15 January 2024.

(3)   Any creditor aggrieved by the decision of the Joint Liquidators to accept the Compromise may apply to the Court seeking to set aside the decision by no later than 4:00pm on 31 January 2024.

(4)   Paragraph 1 shall be stayed and the Joint Liquidators shall not proceed with the Compromise if an application is filed by a creditor(s) pursuant to paragraph 3 above and the matter is to be set down for a hearing with an estimated hearing length of two hours.

(5)   If no application is filed by a creditor(s) by 31 January 2024:

(a)   paragraph 1 shall have immediate effect and the Joint Liquidators shall be at liberty to proceed with the Compromise.

(b)   The Payment shall be paid by 19 February 2024 and time of payment shall be of the essence.

(c)   The Payment shall be in full and final settlement and complete discharge of the Judgment Debt and the Costs Order.

(d)   Once the Payment is made in accordance with this order, the Defendants shall have no further liability to the Claimant and/or the Joint Liquidators under the Order and this claim.

We informed yourselves by way of letter dated 15 January 2024 whereby no objections were raised, and as a result we therefore proceeded to obtain the Compromise. 

As mentioned previously, we acknowledge that this Compromise received was a lot less than anticipated, but at least we are now in a position to pay a token sum to creditors. As a result, we will shortly be in a position to make a dividend payment to outstanding creditors and we will be writing to individual creditors with further information over the coming months.

Throughout 2021 and 2022 we have continued to battle against LAP and Mr Gargia who continues to hold the monies of the creditors of Reclaim and refuses to provide the liquidator with any information as to how these monies are being used.

After the Supreme Court had decided in favour of the liquidator in the Company’s claim against LAP and Mr Garcia, LAP and Mr Garcia filed an appeal at the Court of Appeal together with a stay of the Supreme Court decision. Their application for stay was allowed on the basis that as they were challenging the jurisdiction of the Gibraltar court, disclosure of the accounts and transfer of funds would render the appeal nugatory.

LAP and Mr Garcia were unsuccessful in the Court of Appeal. They subsequently appealed to the Privy Council but again were unsuccessful, thereby exhausting all avenues to challenge the jurisdiction of the Gibraltar courts.

In May 2022, the liquidators filed an application to lift the stay on the Originating Summons which would enable us to obtain the disclosure from LAP and Mr. Garcia. The application also, in the alternative, claimed for a transfer of all the funds (purportedly Euros 1.5million and GBP 7.1 million per Mr Garcia’s affidavit) held by LAP and/or Mr Garcia.

In September 2022, the Supreme Court heard the application and agreed to the following judgment:

(a) A lifting of the stay imposed by the Supreme Court in its order of 29 October 2019;

(b) That the costs arising from the hearings which took place in the Supreme Court on 29 May 2019 and 29 October 2019 should be paid by LAP and Mr Garcia;

(c) That LAP and Mr Garcia now needed to disclose all of the information on the bank accounts they hold to the Liquidator

Immediately after the judgment LAP and Mr Garcia elected to dismiss their lawyers in Gibraltar meaning that as they no longer had Gibraltar legal representation we were unable to serve the final order on them. This is a very common trick employed by those who seek to evade judgment. As LAP and Mr Garcia are both resident in Spain, we had to file an application to serve them out of jurisdiction. This has been a lengthy process as we believe LAP and Mr Garcia are actively avoiding service of the documents. We have had to appoint a company to ensure service is properly effected in Spain.

In the meantime LAP and Mr Garcia sought to have the same matter which we have just exhausted in the Gibraltar Couts brought in front of the Spanish Courts in order to commence the same proceedings again in a foreign jurisdiction.

This has been a lengthy and expensive process, largely due to LAP and Mr Garcia’s appeal and actively avoiding service. As we have mentioned previously the liquidators are out of funds and we are not being supported financially or otherwise by any government authorities. The lawyers are acting for the Joint Liquidators on a no win / no fee basis but with LAP and Mr Garcia’s obstructing tactics, without the support of the authorities we are unlikely to be able to continue much further.

We have approached the Official Receiver in Gibraltar to see if she is willing to at least fund the lawyers so that they may be able to pursue this claim to its finality.

Should any creditor wish to make a complaint to any of the authorities the details to write to are:

On 12 October 2020, LAP and Mr Garcia's appeal was heard by the Court of Appeal as to whether the Supreme Court judge was correct to conclude that Gibraltar has jurisdiction to entertain the insolvency related claims that have been brought against them by Reclaim Limited.

In the initial hearing by the Supreme Court, the learned Judge had made the following findings:

1. The Claims sought in the Part 7 Claim are breach of trust, breach of contract, damages, unjust enrichment – all of which are ordinary claims. As such, it cannot be brought in Gibraltar and must be brought in Spain; 
   
2. For the Company Action, as the claims are insolvency related claims that derive directly or are closely connected with the original proceedings, the Gibraltar court has the jurisdiction to deal with applications for leave to disclaim the contracts and for an order for the transmission of funds pursuant to section 252 of the Insolvency Act. The provisions of the Act have extra-territorial effect and thus, the jurisdiction of the Gibraltar court is not outset by the contract between Reclaim and LAP. As such, the liquidators are allowed to continue with their claim for termination of the contract, disclaimer and the relief sought pursuant to section 252 of the Act and LAP and/or Mr. Garcia must comply with the order for disclosure made by Jack J on 9 May 2017. 

Following the hearing, it was concluded that there was to be a variation to the Originating Summons that had given rise to the jurisdiction challenge, but that otherwise their appeal was dismissed, with an order to pay Reclaim's legal costs.

Now that the jurisdiction point has been settled, the liquidator will continue to pursue the Company's claim against LAP and Mr Garcia in Gibraltar.

Having considered the submissions and the evidence presented by both parties, on 14 October 2019, the learned Judge made the following findings: 

1. The Claims sought in the Part 7 Claim are breach of trust, breach of contract, damages, unjust enrichment – all of which are ordinary claims. As such, it cannot be brought in Gibraltar and must be brought in Spain; 
   
2. For the Company Action, as the claims are insolvency related claims that derive directly or are closely connected with the original proceedings, the Gibraltar court has the jurisdiction to deal with applications for leave to disclaim the contracts and for an order for the transmission of funds pursuant to section 252 of the Insolvency Act. The provisions of the Act have extra-territorial effect and thus, the jurisdiction of the Gibraltar court is not outset by the contract between Reclaim and LAP. As such, the liquidators are allowed to continue with their claim for termination of the contract, disclaimer and the relief sought pursuant to section 252 of the Act and LAP and/or Mr. Garcia must comply with the order for disclosure made by Jack J on 9 May 2017. 

LAP and Mr. Garcia subsequently sought leave to appeal and stay pending the appeal on the basis that as jurisdiction is being challenged, the court, in refusing the stay would be forcing the appellant to submit to the jurisdiction. 

On 29 October 2019, the learned Judge granted LAP and Mr. Garcia’s leave to appeal and their application for stay. As such, LAP and/ or Mr. Garcia need not make disclosure of the accounts relating to Reclaim pending the determination of the same by the Court of Appeal. 

We are now waiting for LAP and Mr. Garcia’s appeal to be determined by the Court of Appeal.

The claims were served by the Spanish authorities on LAP and Mr. Garcia in Spain on 9 April 2018. 

However, on 11 May 2018, LAP and Mr. Garcia filed an application to challenge the jurisdiction and for the action to be set aside and dismissed and/or that the action be stayed in favour of Spanish Arbitration and/or the Spanish Courts. 

The Supreme Court of Gibraltar thereafter heard the application in late 2018. 

In March 2017, the liquidators commenced two sets of proceedings – the Company action and a Part 7 Claim. For both actions, the liquidators sought inter alia a disclosure of the bank statements and all documents in respect of any fund held or controlled by them relating to the Reclaim certificate holders and a declaration that the funds held or controlled by LAP or Mr. Garcia are assets of Reclaim or held for the benefit of Reclaim. The liquidators further sought an order for the funds to be transmitted to Reclaim/the liquidators. 

As both Mr. Garcia and the law firm are domiciled in Spain, the liquidators sought permission to serve the respective claims in Spain. On 9 May 2017, permission was granted to serve the respective claims in Spain on LAP and Mr. Garcia. The judge, Jack J further ordered that LAP and Mr. Garcia disclose, within 28 days of service, copies of the bank statements and all other documentation in their possession in respect of any funds held or controlled by them relating to Reclaim certificate holders and that the liquidators be permitted to make inquiries and applications within and without this jurisdiction for information and/documentation. 

On 16 May 2016 the Moroccan Court which heard our application to access information on the funds which may be deposited with SG, Tangiers decided that it did not have sufficient jurisdiction to make such a decision. This has been a major setback to the liquidation and has meant that there has been little progress in the last year. We have recently met with our legal advisors and we are currently considering other potential avenues to recover funds.

The complications that we have encountered and the reluctance of certain parties in complying with the Gibraltar Court Order which they view as a foreign Court and therefore having no jurisdiction over them shows how difficult it will be to make any recoveries in this liquidation. Investors need to be realistic and appreciate that the likelihood of any distribution in this liquidation is very slim, as in the vast majority of cases the monies were lost by creditors several years ago and it is likely that very little, if any of this money can now be recovered.

The Spanish press reported this week that 60 people had been arrested on the Costa del Sol in Spain by the Spanish Policia Nacional for running a major timeshare scam which has effected over 500 victims. The victims are in the main retired and elderly British citizens who had been promised substantial sums of money for selling their time share properties. Those arrested had posed as lawyers, tax advisors and accountants.

The scam had been in operation since 2009 and the Policia Nacional estimate that in the region of €5 million to €6 million was defrauded from unsuspecting victims every year.

Amongst those arrested in the police raid named "Operation Storm" were the three alleged ring leaders two of whom have been remanded in custody and refused bail. None of them have yet been named. In addition there were many others who were employed as telephone operators and marketing and sales personnel who contacted the victims directly, as well as those who opened numerous bank accounts in their own names in order to be able to launder the money stolen so that it could not be traced.

The police reported that the scam operated at three different levels: firstly victims were contacted and offered a very favourable price for the sale of their timeshare for which they had to pay an administrative charge or a fake notarial fee; secondly when the sale did not materialise, they were contacted by the fraudsters purporting to be lawyers offering them an opportunity to sue the time share company and recover their money, naturally there were legal fees to pay; and thirdly they were contacted by the fraudsters pretending to represent the Spanish courts claiming that they had recovered their money but that they had to pay court fees or taxes before the funds could be transferred to them.

So far around 500 victims have been identified but the Spanish police believe that the number of victims could be in the thousands.

The police operation was set up after numerous complains had been made by victims of the scam to the British police and Europol. The properties effected were spread throughout the Costa del Sol in places such as Mijas, Fuengirola and Marbella.

Those arrested are also British citizens but they were resident in Spain. The ring leader lived in Mijas where their offices were also situated. They operated through 11 different companies and the crimes they have been charged with include falsification of documents, money laundering and being members of a criminal organisation. Those arrested had previous criminal records for similar crimes. The police say that the raid was a success and that they have frozen 78 bank accounts, repossessed 6 cars, 49 computers, a television, 6 mobile phones, a money counting machine and a telephone exchange. The total assets reposed are estimated to be valued in the region of €1 million.

Over 50 police officers took part in the raid.

In September 2015, Charles Bottaro resigned as liquidator and Colin Vaughan of PwC was appointed in his place.

As from this date the Joint Liquidators are Edgar Lavarello and Colin Vaughan.