Aruban Resort on auction

After months of efforts from the Aruba government and timeshare holders of the Aruban Resort Hotel, the lights were literally on again at the resort. Although the Aruba Investment Bank (AIB) contributed to the debt adjustment, the real estate of the resort is auctioned by mortgage holder Wells Fargo. After the bankruptcy of former owner KL Resort & Development nv, the resort was taken over by Wells Fargo. The trustee in the bankruptcy of the resort, Arie Swaen, confirmed that the auction will take place, but that it is still uncertain if one will manage to sell the resort. Wells Fargo’s lawyer, Jeannot de Cuba, stated that the auction will take place at Seaport Marina and that the opening bid has been fixed at 16 million dollars. Despite the intended auction, interlocutory proceedings took place yesterday, instituted by the cooperative association of timeshare holders, The Arubian Resort and Casino Eagle Beach Fractionals Cooperative Association against the mortgage holder Wells Fargo apparently for purposes of securing the position of the Owners’ Association (the cooperative association). De Cuba was surprised about this decision of the cooperative association of timeshare holders. As KL Resort & Development nv owed Wells Fargo much money, the latter decided to have the real estate auctioned by way of a possible sale. De Cuba believes that the timeshare holders have nothing to fear, because it had clearly been inserted in the contract that in the event of a sale, the rights of the present timeshare holders will be respected. According to De Cuba, the cooperative association’s problem is that several rooms have not been sold in timeshare as yet. The lawyer of Wells Fargo sees a good chance for auction. As reported, the company ICAHN Enterprises LP is interested, but the local company Gold Coast Aruba also wants to make a bid. Yesterday afternoon we managed to contact the lawyer of the Owners’ Association, Milly Schwengle. She emphasized again that the intention was not to stop the auction. The lawyer explained that KL Resort & Development nv had left a 53 million dollar debt. The Owners’ Association hoped to be able to redeem this debt somewhat with the sale of the units not sold as yet. According to Schwengle, the trustees had to announce the sale forced by Wells Fargo. In a decision of the Aruban court yesterday, the petition of the Owners’ Association was however dismissed. The Owners’ Association now contemplates instituting proceedings on the merits. The auction will however take place, according to Schwengle.

Source: national newspaper “Antilliaans Dagblad” dated 6 May 2010.

Jeannot de Cuba is managing partner of the Aruban based law firm VanEps Kunneman VanDoorne, and represents the interests of Wells Fargo as mortgage holder of the Aruban Resort Hotel.