It is with concern that the Homeowners (Brilla Group/AHI II Ltd/Bridge Funding Ltd) note the growing confusion surrounding the situation at Cap Juluca. This confusion appears predicated on a great deal of misinformation – whether deliberate or accidental – being circulated inpress releases and newspaper publications over the last several weeks.Such confusion appears to be in danger of clouding the real and serious issues currently being faced, to wit, the survival of Cap Juluca as a premier resort in Anguilla and the secured employment of some 360 Anguillian citizens and residents. Clearly a collapse of Cap Juluca will also impact the Homeowners, whose villas are located in Cap Juluca and in this regard the Homeowners share the concerns regarding the future of Cap Juluca. In an effort to allow this matter to be considered in the clear and urgent manner necessary, the Homeowners would wish to set out a few basic facts, whichit is hoped will serve to dispel much of the confusion.
1. Neither Mr. and/or Mrs. Hickox nor Cap Juluca L&C Ltd isthe legal owner of any land at Cap Juluca. Under the laws of Anguilla, no foreigner is entitled own land in Anguilla(especially resort land) unless his credibility, financial resources, and expertise has been fully scrutinized and approved by the Government of Anguilla. Only if the GOA is satisfied that these prerequisites have been met, will it issue an Alien Landholding Licence (“Licence”) to such foreigner, to allow him to lawfully own land in Anguilla. Neither Mr. and/or Mrs. Hickox nor Cap Juluca L&C Ltd has been granted an Alien Landholding Licence. Accordingly, any description of these persons as “legitimate owners” is quite simply incorrect and misleading.
2. The obvious intention and benefit of the requirement of a Licence is to ensure that foreign persons or entities investing in land Anguilla(especially resort land) do not tie-up valuable land resources without having the wherewithal to successfully operate and develop such land. This is of course critically important when dealing with prime beach front property. Since Mr. and Mrs. Hickox are not the holders of a Licence, the current legal owner of the lands which Mr. and Mrs. Hickox/Cap Juluca L&C Ltd claims they own, remains as Leeward Isles Resorts Ltd. A cursory search of the Lands Registry will confirm this undeniable fact. Mr. and Mrs. Hickox do not have any “right” to legally own this land – they merely entered into a sale and purchase contract for this land, the legal ownership of which land is wholly conditional on them demonstrating the requisite credibility, financial resources, and expertise to successfully operate and develop Cap Juluca.
3. The events leading up to Mr. and Mrs. Hickox/Cap Juluca L&C Ltd entering into a sale and purchase agreement for the relevant lands is as follows. Mr. Hickox registered charges in the aggregate amount of US$ 16, 495, 102.00 against the relevant lands at Cap Juluca. By reason of Mr. Hickox’s assertion that he was entitled to compound interest on these amounts – Mr. Hickox later alleged that he was due a debt somewhere between of US$ 120, 000, 000.00 and US$ 180, 000, 000.00. It was this staggering claim for compound interest by Mr. Hickox that precipitated the ultimate liquidation at Cap Juluca.
4. In May 2012, Mr. and/or Mrs. Hickox elected to exercise the right to sell the charged lands at Cap Juluca. As a registered chargee, Mr. and/or Mrs. Hickox would have had the right to sell the charged lands at auction, collect the proceeds and apply it to their registered debt. To be clear, a chargee does not have the right to own the land charged. He only has the right to sell it at auction and receive the proceeds of such sale. Mr. and Mrs. Hickox chose not to simply sell the land at auction and receive the proceeds -but instead decided to attempt to buy the lands themselves at auction. Simply stated, it was perfectly open to Mr. and/or Mrs. Hickox to endeavor to sell the charged land at auction, collect the proceeds of sale and have the Resort purchased by a credible, financially sound and expert developer who could comfortably obtain a Licence. Had this course of action been pursued Mr. and Mrs. Hickox would have received the proceeds of sale and the purchaser at auction could have already commenced refurbishment and development of Cap Juluca – elevating it to the status it deserves, returning it to profitability and providing long term job security for its employees. Mr. and Mrs. Hickox refused to pursue this course of action regardless of the benefits to Cap Juluca, its employees and Anguilla.
5. In determining to acquire the charged lands, Mr. and Mrs. Hickox did not, as one would have expected, obtain any pre-approval from the Government of Anguilla as to their suitability for the grant of a Licence. Essentially Mr. and Mrs. Hickox decided to take the risk that once they entered a sale and purchase agreement for the lands, the Government of Anguilla would be forced to grant them a Licence – whether or not they satisfied the criteria for the grant of such Licence. It would appear extremely reckless for any foreign investor to purchase land in Anguilla(especially a working property with employees) with no inkling as to whether or not they would be able to secure a Licence and take ownership of such land. Clearly in the event that such person was unable to demonstrate the necessary credibility, funding and expertise to warrant the grant of a Licence, the property and staff would be left in a most precarious and uncertain situation. Mr. and Mrs. Hickox determined to accept these risks despite the obvious dangers to the Resort and the employees.
6. This risk having been taken, the Resort and its employees are now faced with the diresituation, where the lands of Cap Juluca have been tied up in a sale and purchase contract regardless of the ability of the purchaser to demonstrate the credibility, finances and expertise to warrant the grant of a Licence. The victims of this choice are the Cap Juluca Resort, the employees, the Homeowners andAnguillain general.
7. Notwithstanding the current difficulties being a direct result of the risk taken by Mr. and Mrs. Hickox, their Press Release of 27 August 2012 demonstrates their priorities with regard to the Resort and employees: “… step by government towards compulsory acquisition… Cap Juluca will be closed and will decay while the Courts are tied up for years… Mr. and Mrs. Hickox wish to advise the people of Anguilla… that they intend to resist compulsory acquisition… with all the resources available to them.” The only logical conclusion to be drawn by these statements is that Mr. and Mrs. Hickox intend to attempt to use the courts to close down Cap Juluca indefinitely if they cannot own it. This clear statement of intent shows little concern for the Resort and the staff. In other words, if Mr. and Mrs. Hickox are unable to satisfy the criteria for the grant of an Alien Landholding Licence – it appears their intent to attempt to shut down the Resort rather than allow any other developer to successfully own and operate the Resort.
8. The Homeowners are collectively the legal owners (sublease) of 4.5 villas (approximately 25% of the Resort villas) at the Cap Juluca Resort – each of whom have paid over substantial sums, have demonstrated themselves to possess the requisite credibility, financial soundness and expertise to warrant their Licences and have been duly issued with such Licences. These entities all have the right, amongst others, to (a) arrange for independent rental of their villas, and (b) collect the net rental revenues from such villas.
9. There have been suggestions in the Anguillian (21/9/12) by the Mediators that “Mr. and Mrs. Hickox have committed to reopen Cap Juluca for the upcoming season with or without the Brilla Group’s villas being part of the rental pool.” However, in the same issue of the Anguillian, Mr. and Mrs. Hickox themselves clearly reject this suggestion and confirm that any“ renovation commitment … is contingent upon GOA standing firm against allowing Brilla Group’s villas in a separate management agreement…”
10. Notwithstanding the basic issue of whether or not Mr. and Mrs. Hickox, themselves, are capable of satisfying the criteria of credibility, financial resources and expertise for the granting of a Licence, Mr. and Mrs. Hickox appear to see fit to make demands that the Government of Anguilla deprive Brilla Group of its legal right to operate its villas as a condition of them accepting a Licence. This is an incredible situation where a foreign applicant for a Licence is publically dictating to the people ofAnguillathe terms upon which he is willing to accept a Licence.
11. As unacceptable as it is for Mr. and Mrs. Hickox to attempt to force the Government of Anguilla to disregard the legal rights of another (under threat of allowing Cap Juluca to deteriorate) the reality of the situation is that the issue of the villa rental pool is a “red herring”. Regardless of whether Brilla Group arranges for the independent rental of its villas or not, the net rental income of those villas would not accrue to Mr. and Mrs. Hickox in any circumstances. Clearly the Homeowners are entitled to the net rental income from their own villas. The fundamental consequence of this fact is that Mr. and Mrs. Hickox are simply not in a position to operate Cap Juluca as a viable concern – which inability would inevitably lead to another bout of liquidation for the Resort.
12. The independent rental of the Homeowners’ villas does not need, of course, to impact the number of staff needed by the Resort since those villas and their guests would still require the services by the same number of staff –regardless of such independent rental.
13. The consequence of any inability of Mr. and Mrs. Hickox to viably operate the Resort is compounded by the clear statement by Mr. and Mrs. Hickox that they intend to, once again,encumber the lands at Cap Juluca with further debt to themselves. In their letter in the Anguillian (21/9/12), Mr. and Mrs. Hickox categorically state that they intend to “allocated US$ 6,500,000… to be secured against existing land with improvements…” As correctly identified by several commentators – the Cap Juluca Resort simply cannot bear the weight of further charges against the lands if it is avoid a replay of the liquidation of the Resort.
14. Even worse, Mr. and Mrs. Hickox now clearly state that they intend to borrow the money necessary to develop Cap Juluca. This means that (a) Mr. and Mrs. Hickox will not be using their own funds to further develop Cap Juluca and (b) almost certainly such “outside financiers” will require even further charges against the Resort lands – thereby leading Cap Juluca to, once again, be the subject of crippling debts and encumbered land.
15. The consequence of all this debt Mr. and Mrs. Hickox seek to secure/charge against the lands at Cap Juluca is that in the event that they are unsuccessful in operating the Resort and servicing the debt, it is open for them to withdraw from the Resort leaving it crippled by overwhelming debts and charges against the lands. Once again, the consequences of this tremendous risk, which Mr. and Mrs. Hickox appear happy to take,is one that will ultimately fall upon the Resort, its employees, the Homeowners and Anguilla.
16. Once one realizes that Mr. and Mrs. Hickox have no absolute right to become the legal owners of the Resort (and indeed no foreign person has such absolute right without a Licence), the true issue becomes clear – to ensure that the Cap Juluca Resort is owned and operated by a credible, financially sound and professional person or entity which is capable of refurbishing, developing and operating the Resort on a secure basis for the years to come. Such person or entity should be able to provide the requisite funds without the need to borrow funds and further encumber and risk the lands of Cap Juluca.
17. The Homeowners, as owners of their villas located within the Resort, are naturally also affected by the same concerns of the Resort, its employees and Anguilla. A collapse of the Resort – especially if leaving behind further unsustainable debts and charges – also affects the Homeowners and their investment inAnguilla. By their analysis, to be sustainable, Cap Juluca requires approximately US$ 25, 000, 000.00 non-debt financing to restore it to its glory and to undertake the necessary expansion of the room basis of the Resort. The Homeowners have always stated that they are willing to work with any person or entity that is able to provide credible, financially sound and professional ownership and operation of the Resort. To date Mr. and Mrs. Hickox have not demonstrated any of these attributes to the satisfaction of the Homeowners. (Indeed another right of the Homeowners is, in the event of a transfer of the Resort leasehold interests to Mr. and Mrs. Hickox/Cap Juluca L&C Ltd, the Homeowners also have the right to demand a repurchase of their 4.5 villas, at a cost of approximately US$ 25,000,000.00, by Mr. and Mrs. Hickox/Cap Juluca L&C Ltd. There has been no indication or evidence that Mr. and Mrs. Hickox have the financial ability to pay the estimated US$10,000,000.00 owed to the GOA in addition to the US$25,000,000 repurchase price, and even less so to renovate and operate the resort before or after the payment of such repurchase price andGOAfees.) The Homeowners wish to make it absolutely clear that this conclusion does not speak to any antipathy towards Mr. and Mrs. Hickox personally, but is merely a frank assessment of their commercial ability and proposals
18. This is and has always been the central position of the Homeowners. If Mr. and Mrs. Hickox had been able to demonstrate the requisite attributes to the Homeowners and confirmed their unequivocal willingness to respect the Homeowners rights, then the Homeowners would have had no difficulty with working with Mr. and Mrs. Hickox. The basic fact remains, however, that Mr. and Mrs. Hickox have never been able to demonstrate the relevant attributes to the satisfaction of the Homeowners – which situation is compounded by the recent confirmation by Mr. and Mrs. Hickox that they intend to finance the refurbishment and development of the Resort by way of loans and further charges against the Resort lands.
19. Since November 2011, the Homeowners have attended each and every conference arranged by the Liquidator or the Government of Anguilla in an attempt to find a solution to the situation at Cap Juluca. Indeed, the Homeowners attended the Mediation recently convened inAnguillaby the Civil Society Group. Mediation by definition is an attempt to bring a peaceful settlement between disputants through the objective intervention of a neutral party. Since the current difficulties at Cap Juluca are the result of Mr. and Mrs. Hickox’s inability to demonstrate the credibility, financial soundness and expertise to warrant the grant of a Licence, the Homeowners were slightly perplexed by the suggestion of Mediation. Restated, the difficulties at Cap Juluca are not the product of any “dispute” between the Homeowners and Mr. and Mrs. Hickox but merely a result of latter persons being able to demonstrate the attributes necessary for the grant of a Licence. Notwithstanding these reservations and in recognition of the importance of Cap Juluca to Anguilla, the Homeowners agreed to attend the Mediation in good faith.
20. The Homeowners understanding of the Mediation was that it was to be an unbiased and non-partisan discussion of the Cap Juluca situation. To this end the Mediators requested – and the Homeowners consented – that no legal counsel would be present at the meetings. It was therefore with some surprise that, during the course of the actual mediation, the Homeowners learned that the Mediators had convened press conferences and had voiced certain positions and opinions prior to the Mediation. The decision by the Mediators to enter into the political arena and offer their own recommendations based on a limited review of the available material – though no doubt emanating from a desire to assist the situation – is clearly inconsistent with a Mediation and may, unfortunately, have served to further cloud this already complicated and unduly prolonged situation. With regard to the Homeowners, their position both before and after the Mediation remains the same – the Homeowners are willing to work with any person or entity that is able to provide credible, financially sound and professional ownership and operation of the Resort and who will respect their rights to own and operate their own villas.
21. The Mediators have repeatedly stated that there is an appearance of favour by theGOAfor the Homeowners. However a logical assessment of the credibility, financial strength and expertise of the Homeowners by any person – whether by the Government of Anguilla or any other person – is quite different from according any bias or preferential treatment. The bare fact of the matter is, however, that there is no logical other party than the Homeowners to look to for a speedy reopening and salvaging of the Resort in the event such person is needed. No other party has recently invested millions of new money into the Resort. No other party as already been recently vetted and approved by the GOA for Alien Landholding Licences. No other party has the immediate availability of cash, and not debt, to renovate and operate the Resort. No other party is in a position to immediately move to restore Cap Juluca and the jobs of the Anguillians tied to the Resort. Clearly the Homeowners, being the owners of approximately 25% of the villas in Cap Juluca have a substantial interest in ensuring that the Resort is owned and operated successfully. Moreover, the Homeowners have the requisite experience and professional expertise to own and operate a luxury Caribbean resort. To not consider the Homeowners as potential buyers of the Resort would be to will fully close ones eyes to the realities of this situation and would serve no useful purpose.
22. Notwithstanding the Homeowners’ good faith gesture in dutifully attending the Mediation meetings in Anguilla, the Mediators – in a manner clearly inconsistent with any possible definition of the term Mediation – took it upon themselves to proclaim “findings” and “recommendations” based on these Mediation meetings. With all due respect to these venerable gentlemen, a cursory view of their findings confirm the inability of the mechanism of Mediation to focus on the true legal and factual issues in any given situation – and indeed it is for this reason that Mediation is acknowledged as serving a wholly different purpose than judicial proceedings or arbitration. For example –
a. The Mediator’s suggest that the “Government of Anguilla publically affirms Mr. Hickox as the legitimate owner of 73% of the resort…” As previously explained, Mr. Hickox is quite simply not the legal owner of the relevant lands and, indeed, could not lawfully be such owner without having satisfied the requirements for the grant of a Licence.
b. The Mediators suggest that any MOU with Hickox contain a “penalty clause”. Had the Mediators consulted with their legal representatives, they would have no doubt be advised as to the questions regarding the enforceability of “penalty clauses” as a matter of law.
c. The Mediators suggest that “Mr. Hickox be given a fair chance to demonstrate his ability to restore and operate Cap Juluca.” The Mediators make no mention of Mr. and Mrs. Hickox stated intention to charge the lands at Cap Juluca to secure any funds used in the refurbishment and development of Cap Juluca. Even more seriously, the Mediators do not make any mention of the consequences to be faced, by reason of such charges, in the event Mr. and Mrs. Hickox prove unable to operate the Resort profitably or even secure all the necessary funds.
23. Of equal concern are the “findings” the Mediators assert. For example –
a. The Mediators report a “finding” that “the Brilla Group’s main argument is that Mr. and Mrs. Hickox have not satisfied their obligations to the Government of Anguilla and that they owe the Government of Anguilla in excess of $10 million dollars. It is certainly the case that Mr. and Mrs. Hickox would owe the Government of Anguilla in excess of $ 10 million dollars in taxes and/or arrears since the Lease Documents require any transferee of the Leases to clear up any arrears of rental and, indeed, to honour all obligations in the Lease including obligations to honour the rights of the Homeowners. It is, however, grossly misleading to suggest this obligation of Mr. and Mrs. Hickox is the principal concern of any of the Homeowners (including Brilla Group). As stated above, the Homeowners concerns centre on the overall inability of Mr. and Mrs. Hickox to demonstrate the requisite credibility, financial resources and expertise necessary to own and operate the Resort and their willingness to respect the clear rights of the Homeowners to own and operate their own villas. Clearly the possibility of collapse of Cap Juluca is of great concern to the Homeowners as their villas are located upon the Resort.
b. The Mediators report a “finding” that the “Brilla Group are of the view that they don’t have an obligation to have their villas become party of the rental pool at Cap Juluca as a result of the sublease that was agreed with LIR. Mr. & Mrs. Hickox did not sign the sublease and as such were not party to this arrangement.” It is certainly the position that the Brilla Group that it is not required to be part of the rental pool. However, had the Mediators consulted with their legal representatives, they would have no doubt be advised that upon the transfer of a Lessor’s interest (i.e. LIR’s) such transferee is subject to the same obligations to original Lessor – whether or not the transferee was a party to such arrangement.
24. With the greatest of respect to the Mediators, the above examples (and indeed a more extensive list of examples are easily available) of the wholly incomplete “findings” and “recommendations” clearly demonstrate the unsuitability of “Mediation” as a venue to for such action. Had the Mediators indicated that the stated Mediation was in fact intended as a basis for them to attempt to make “findings” and “recommendations”, it would have been far more appropriate for them to have informed the parties of this intention and to then undertake a scrupulous and detailed examination of all the relevant factual and legal issues before making such “findings” and “recommendations”. The Homeowners wish to make it clear that they mean no disrespect to these gentlemen in reciting the above examples, but merely wish to dispel any further confusion that may be been caused by the attempted “Mediation” so as to allow focus upon the real and pressing issues facing Cap Juluca.
25. The situation at Cap Juluca is rapidly deteriorating. The Resort itself is now physically deteriorating. Mr. and Mrs. Hickox have now declared their intent to re-open Cap Juluca–which they intend to do without having satisfying the criteria for the issue of an Alien Landholding Licence, by making demands of the Government of Anguilla and by irrevocably charging the lands at Cap Juluca with further unsustainable debt. The risks associated with all of these actions will ultimately fall upon the Resort, the employees and the Homeowners.
26. It is the Homeowners considered opinion, that the current difficulties facing Cap Juluca are only solvable by ensuring that the Resort is owned and operated by a person or entity who is credible and with a proven track record of operating premier resorts, who has the financial resources to invest in the restoration and expansion of Cap Juluca without the needed of borrowed funds secured against the lands of the Resort, who is willing to respect the rights of the Homeowners and who is able to source the expertise necessary to return Cap Juluca to its full glory.
Respectfully,
Adam D. Cohen
Brilla Group
Also on behalf of:
Anguilla Hotel Investors LLC
Anguilla Hotel Investors II, Ltd
Bridge Funding Limited
Paid Statement
