PHILIPSBURG–Paradise Real Estate (PRE) N.V., Member of Parliament Frans George Richardson and Anthony Alexander Carty have lost the summary proceedings filed in the Court of First Instance against Bank of Nova Scotia in their efforts to stop the public auction of the Sunset Building in Simpson Bay. The property has a market value of US $3.2 million and an auction value of $2,240,000.
In its ruling of Friday, October 18, the Court rejected their claim, which means that the former cinema which currently houses a wine bar and lounge, a club and various other entertainment venues, will be sold during a public auction at Holland House Beach Hotel at 10:00am Wednesday, October 30.
The property will be auctioned off because current owners PRE, Carty and Richardson have failed to pay $1,317,647 in debts to Scotiabank.
In October 2011 parties signed a so-called commitment letter in which the bank provided a loan of $2 million, which was made available to PRE in March 2012.
Considering repayment, it was agreed that the loan would be repayable in 59 equal monthly instalments of principal and interest of $17,423, commencing 30 days after the initial advance, with a balloon payment for all the outstanding amounts to be made on or before the 60th month. The term of the loan was five years and amortisation of the loan was 15 years.
As collateral for the repayment of the loan, the bank secured a mortgage on long-lease property and personal guarantees from Carty and Richardson to the amount of $2 million. The bank’s leasehold rights are described in letters of admeasurements SXM SB 018-021/1997 and SXM SB 025/1997.
The five-year term of the loan expired in March 2017. The bank extended the term of the loan for one year, and the extended term expired in March 2018. At that point, the bank did not extend the loan any further, as it no longer had the intention to do so.
As PRE had failed to make the balloon payment of $1,556,489 the company was in default, Scotiabank stated in a letter to plaintiffs of September 28, 2018. In the letter the bank gave notice of its intention to terminate its banking relationship with PRE and that “all indebtedness and liability of your company to the bank has become immediately due and payable and all security held by the bank has immediately become enforceable.”
By letter of May 29, 2019, the bank terminated its relationship with PRE and required payment of the remaining amount of $1,317,647 by June 30, 2019, at the latest. The auction was announced by a bailiff September 17-18.
PRE, Carty and Richardson disagreed and pleaded with the Court to reject the claim and to order the bank to continue its relationship with them and not discontinue the loan. They claimed that the expired term of the loan was extended by “at least” five years.
Plaintiffs stated that monthly instalments were paid on time and that the bank in auctioning off their long-lease rights was in violation of its duty of care. The bank had also misused its powers and termination of the loan would be “unreasonable and unfair,” claimants said.
However, the Judge rejected the claims and ordered plaintiffs to pay legal fees to the tune of NAf. 1,500.