INDIGO BAY–“Make your dreams a reality,” it is stated on the website of Indigo Bay Estates, advertising itself as “150 acres of prime real estate in one of the most desirable locations in the Caribbean.” However, some clients’ dreams have turned into nightmares. Indigo Bay Development Corporation (IBDC) N.V. was declared bankrupt by the Court of First Instance on Tuesday, March 6.
IBDC and its statutory director Marc C. van de Bilt launched the first big project at Indigo Bay Estates, attorney-at-law Stefan Fox of Fox and Associates law office explained. As the developer was unable to finish the project, two of the law office’s clients filed petitions with the Court to declare IBDC bankrupt.
The Court granted the request two weeks ago and declared IBDC, which holds office at Plaza Del Lago in Cole Bay and is registered with the Chamber of Commerce, in a state of bankruptcy.
The Court appointed Judge Paula van der Burgt as Judge of Instruction and attorney Hendrich Seferina as curator.
Van de Bilt and co-contractor Kevin Malcolm Smith each also own an interest in parent company Cay Bay Development N.V. through another entity. “Contractor is a separate and distinct entity from Cay Bay Development N.V,” it is stated in the construction agreement for the “Ocean Project” at Indigo Bay.
Fox’s clients Jewels Enterprises N.V. and Eric Jean Montillot had filed bankruptcy petitions on November 14, 2017, and January 17, 2018, respectively. Montillot represents a claim of US $800,000 on the developer.
IBDC had closed agreements for the construction and delivery of residential homes for several of Fox’s clients at Indigo Bay. However, at the end of 2015, and particularly in December 2016, IBDC confirmed it was unable to finish the project because it no longer had the financial resources to do so.
According to Fox, did not only concern Jewels and Montillot. Some 15 other clients were also informed that they had to finish the construction of their homes themselves.
In a draft termination and settlement agreement IBDC recognised that Jewels Enterprises had realised overpayment and that fines were forfeited as IBDC had failed to deliver.
All other owners in the project were confronted with similar problems and were forced to hire a new contractor to finish the construction of their homes, Fox’s lawyers said. As IBDC had ceased to pay, bankruptcy is justified, they stated in their petitions to the Court.
Jewels and IBDC entered into a construction agreement on Lot O-27 at Indigo Bay Estates for an all-in construction price of $478,250 to be paid in accordance with a payment schedule.
As of the date of the termination agreement on December 16, 2016, the contractor had finished approximately 75 per cent of the project and Jewels had paid $387,250 towards the construction price, resulting in IBDC being in an estimated overpaid situation in the amount of $23,780. Additionally, Jewels had accrued a late-delivery penalty in the amount of $36,000.
According to Fox, the claims were not contested in Court. “I’ve understood from a client that payments have been transferred to accounts in the United States and not to a notary until the transfer [of real estate – Ed.] was realised. The following partial payments after delivery went to accounts in the US. I have not yet been able to verify this myself,” Fox said.
The project was to be completed by December 15, 2015. In the event the contractor failed to deliver, clients have the right to terminate the construction agreement, on which the contractor is to reimburse all the amounts paid.
Additionally, in case the contractor defaults on the construction agreement because of which the agreement is dissolved by the principal, the contractor or assignee is obligated to purchase the lot from the principal. This needs to be done via signed deed of transfer recorded at the office of a licensed civil law notary in St. Maarten within 30 days from the date of the construction agreement being terminated by the principal for the purchase price as originally paid by the principal to Cay Bay Development N.V., the agreement reads.
Under the same agreement, the contractor also agrees to incur penalties of $3,000 per month for completion of the project after the completion date.
In the event the business interests of the contractor are placed under the control of administration of any legal or governmental decree, or in the event that the contractor is declared bankrupt, the principal will have the right to terminate the construction agreement by presenting written notice to the contractor, in which case the so-called milestone payments made by the principal to the contractor will be repaid by the contractor to the principal, with the latter being allowed to complete the project with an alternate contractor, it is stated in the construction agreement.
Source: The Daily Herald https://www.thedailyherald.sx/islands/74682-court-of-first-instance-declares-indigo-bay-developer-bankrupt
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