Wed | Aug 16, 2017

Palmyra depositors to get 14% of their money back

Published:Friday | February 3, 2017 | 2:00 AMNeville Graham

Palmyra depositors have been offered 14 cents on the dollar as settlement, following the disposal of the incomplete project.

One of those depositors, who paid down US$738,000 on two condo units in the Montego Bay-based resort complex, will get back US$104,549.40 of his investment.

"Aww, geez, I thought it was a joke ... a bad joke, really; very painful," depositor Robert Garland told the Financial Gleaner.

He was reacting to the letter dated January 23, 2017 that he got from the Real Estate Board of Jamaica spelling out the settlement.

"Please be advised that on the basis of the sale of the captioned property which was under receivership, the board has received from the receiver a sum of money that will enable you to receive a portion of your outstanding balance of deposit that you made ...," the correspondence read.

CEO Sandra Watson says after intervening in 2012 and getting the court to rank depositors on the same level as the banks in terms of compensation, the settlement was the best the board could secure under the circumstances.

Palmyra was sold for around half the value of the US$110 million of debt that backed the project.

"Based on law, the receiver's expenses have to come out first, and after those expenses, whatever is left is divided based on what each party originally put in," said Watson.

"The board insisted and the bank agreed and the interest was backed out," Watson added, referencing the bank that placed Palmyra in receivership.

She said had the board fought further, it would have meant more costs that would in turn reduce the pool of funds left to be shared. The board negotiated compensation for 58 depositors.

Fight not over

Garland says he will fight on.

"I'm gonna wait until I get the funds that they decided on, then I will use part of that funding to pursue some other matters or some other avenues," he told the Financial Gleaner.

Watson declined comment on how the 14 cent, or 14 per cent, rate of compensation was arrived at, while reaffirming that were it not for the REB, depositors would have been worse off.

"They would have been unsecured creditors and could only get payment after the secured creditors. With the board's intervention, through its charge, it was at least able to incur an equal space to the lending institution in proportion to what was invested," Watson said.

"We threw a lot of resources at this. I sent in our auditors for them to check and ensure that there was not even a dollar in dispute. We also sent in trained property managers and several team members to make sure that we got the best result under the circumstances," she said.

Palmyra Resort & Spa was placed in receivership in 2011, and the incomplete development was finally sold last year to Sagicor related entities.

Garland, a 61-year-old American who says he works in security, said that the Palmyra experience has hurt his plans and his outlook on Jamaica.

"That won't stop my investments, but right now, it won't be in Jamaica. Once you get burned in a particular area, you tend to shy away from it," he said.

neville.graham@gleanerjm.com