Section 75 for bankrupt Madeiran hotel

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JessLHawley
JessLHawley Posts: 3 Newbie
in Consumer rights
The Regency Palace Hotel on the island of Madeira went bankrupt on the 30th June 2015, leaving hundreds of British "traditional" and "flexible" timeshare owners out of pocket. The administrators have yet to formally declare the hotel as bankrupt because there is the slim chance (yeah right) another owner may be found who is willing to take on the hotels existing liabilities.

Given that the hotel is not going to reopen any time soon (carpets and curtains have all been stripped out), and given that in reality a new owner is not going to take on existing debts, those of us who were lucky (or sensible) enough to pay deposits etc on credit cards are pursuing Section 75 claims. Those of us who have actually heard back from our banks etc have had claims rejected because the hotel "might open again". Using the argument of anticipatory breach is not holding any water.

Furthermore. without exception we have all been told that the success of our claim depends on the outcome of the credit card company's claim against the hotel.

Does anyone know the exact part of Section 75 that covers anticipatory breach? I used the MSE template covering letter and added a few bits to head off any "the hotel might reopen" silliness at the pass, but I don't anticipate any success. Any advice would be gratefully received. Many of us literally have thousands of pounds at stake....

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  • unholyangel
    unholyangel Posts: 16,863 Forumite
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    JessLHawley wrote: »
    The Regency Palace Hotel on the island of Madeira went bankrupt on the 30th June 2015, leaving hundreds of British "traditional" and "flexible" timeshare owners out of pocket. The administrators have yet to formally declare the hotel as bankrupt because there is the slim chance (yeah right) another owner may be found who is willing to take on the hotels existing liabilities.

    Given that the hotel is not going to reopen any time soon (carpets and curtains have all been stripped out), and given that in reality a new owner is not going to take on existing debts, those of us who were lucky (or sensible) enough to pay deposits etc on credit cards are pursuing Section 75 claims. Those of us who have actually heard back from our banks etc have had claims rejected because the hotel "might open again". Using the argument of anticipatory breach is not holding any water.

    Furthermore. without exception we have all been told that the success of our claim depends on the outcome of the credit card company's claim against the hotel.

    Does anyone know the exact part of Section 75 that covers anticipatory breach? I used the MSE template covering letter and added a few bits to head off any "the hotel might reopen" silliness at the pass, but I don't anticipate any success. Any advice would be gratefully received. Many of us literally have thousands of pounds at stake....

    Well if it does reopen and keeps to the original terms, theres no breach therefore you have no claim against the supplier therefore you have no claim against the card company. Tbh I wouldnt even say there is enough for an anticipatory breach atm.

    But the 2nd part about depending on the outcome of the success they have with the hotel is baloney and case 86/05 from the following link will back that up:

    http://www.financial-ombudsman.org.uk/publications/ombudsman-news/86/86-consumer-credit.htm
    You keep using that word. I do not think it means what you think it means - Inigo Montoya, The Princess Bride
  • JessLHawley
    JessLHawley Posts: 3 Newbie
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    The thing is that the hotel is being stripped back to bare walls - it's clearly not opening again any time soon. The administrators are not answering any queries, and seem to be using the "may open again" as a gambit to keep the situation stagnant and prevent claims against the company. Surely there must be some redress?
    Thanks for providing the case for the second issue - much appreciated!
  • unholyangel
    unholyangel Posts: 16,863 Forumite
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    JessLHawley wrote: »
    The thing is that the hotel is being stripped back to bare walls - it's clearly not opening again any time soon. The administrators are not answering any queries, and seem to be using the "may open again" as a gambit to keep the situation stagnant and prevent claims against the company. Surely there must be some redress?
    Thanks for providing the case for the second issue - much appreciated!

    Apparently anticipatory breach was recently dealt with in the case of sk shipping v petroexport.

    It was held that the innocent party can only terminate if they can show that the other party gave a clear and absolute intention that it would not perform its obligations.

    I don't think that a clear and absolute intention to breach the contract has been stated here. Although if they had already breached the contract/refused you a contractual benefit or option then that could perhaps be used to show clear and absolute intention.
    You keep using that word. I do not think it means what you think it means - Inigo Montoya, The Princess Bride
  • JessLHawley
    JessLHawley Posts: 3 Newbie
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    Brilliant - thank you very much. Sorry to keep chucking questions at you, but this is the most help any of us have received, and I'm going to make the most of it!

    Several people have obviously had their reservations canceled / have not had their timeshare weeks made available to them, so does it sound to you as though it were a clear breach? And if people are unable to use the flexible weeks that they have paid for (think of it like paying for a series of weekly holiday certificates up front), couldn't that be used to demonstrate absolute intention?

    I'm also intrigued over whether or not, for the purposes of section 75, a debt can be sold on and still consider the original contract between consumer and supplier still valid. The company that is all over my paperwork no longer exists.... :(
  • bris
    bris Posts: 10,548 Forumite
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    Unfortunately a clear breach hasn't been established yet for S75 purposes. The people who have missed weeks can be compensated for their loss by the new owners (if one is found) so a full loss is not yet established.


    The debt can and often is sold as a going concern with the new owners taking on the old owners liabilities, think about Comet being sold for a pound as a good example of that.


    In this case there is practically no chance of this happening due to the nature of the business as timeshares are sold for years to come, so the new owners would see no new cash coming in.


    The administrators are going by the book and looking for the best course of action for the creditors, until they exhaust the process they are legally required to do they can not declare it a total loss and liquidate it.
  • RocketDogWalker
    RocketDogWalker Posts: 1 Newbie
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    Any updates? My parents still have 20 years left in the Regency Palace! ����
  • BorisThomson
    BorisThomson Posts: 1,721 Forumite
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    RocketDogWalker wrote: »
    Any updates? My parents still have 20 years left in the Regency Palace! ����

    The hotel has reopened, it was taken over by the Pestana group. Have you contacted them/ the administrators to ask the status of previous liabilities?
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