Wednesday, December 10, 2008

Humber Valley Declares Bankruptcy

Those of you who have read our previous blog on the precarious financial situation at the Humber Valley Resort (HVR) near Corner Brook in Newfoundland, will not be surprised to hear that the company has officially declared bankruptcy.

Below is the announcement from Newfound NV (thanks to Crazy About Newfoundland for this):

December 2nd, 2008
Humber Valley Resort Corporation

Dear Owner,

You may recall from our presentation and earlier correspondence that, during the time Newfound has been financing the CCAA process, we also formulated a draft preliminary plan of arrangement that, in our view, gave the interested parties i.e. the creditors and the chalet owners the best result in the unhappy circumstances that Humber Valley Resort Corporation found itself in.

The plan that we had put forward asked the Government of Newfoundland to support it in 3 areas, namely;

* To assist in bringing flights into Newfoundland from the UK

* To work with the local Municipality in their takeover of running essential services on the resort

* Transferring into freehold, the amount of leasehold land that HVRC had already paid leasehold fees on, so that financing of new development could take place enabling the creditors to participate in the resultant profits.

It was not feasible to submit our proposed plan to the Court for approval, or to the creditors and chalet owners to vote on, unless we had some indication of support from the Government, in writing, to it. Conditional support would have been acceptable. The Government have had our proposal for consideration since 16 October. Whilst it is fair to say that we have had encouraging discussions, we have had no confirmation of the Government position, either verbally or in writing. Our initial requested deadline for a decision was 14 November.

I was promised on Monday 24 November that, after the Cabinet meeting of 27 November I would be informed of the decision, either way, in writing. I explained during that conversation that we had run out of time as our CCAA protection was due to expire and if I could not submit the plan then I would have no choice other than to withdraw our proposal, which would mean imminent bankruptcy for HVRC. The alternative would be for Newfound to risk a great deal more money as a creditor to HVRC and I do not have Board authority to do so. I was very careful to stress to the Government on Monday 24 November, that I wanted to and was able to continue, but was clear that close of business on Friday 28 November was our absolute deadline for a Government reply.

This was, sadly, not forthcoming. I understand, from a third party, that the proposition was discussed as cabinet but there was no resolution. Despite our best efforts, there is nothing further we can do. I am deeply disappointed, as I still believe our ideas were the best possible result in the circumstances.

In these circumstances, I am afraid that we join you all as another creditor, and confirm that HVRC will have to file an Assignment in Bankruptcy, and that bankruptcy is now imminent. I am so sorry not to bring you better news. Should you have any questions, you may, with immediate effect, address them to Mat Harris and his team at Ernst and Young. Derrick White will no longer be in a position to formally help you.

Yours sincerely,
Jayne McGivern
CEO Newfound NV

Oddly enough if you visit the Newfound website you will still find the company extolling the virtues of the Humber Valley Resort. In the investor relations section it states:

"Newfound is a creator and operator of international luxury resorts and destinations. The Company has a high quality portfolio of resort projects at Humber Valley in Canada and in Nevis and St. Kitts in the Caribbean.

Humber Valley Resort, with 2,200 acres, currently has over 200 privately owned properties the majority of which are available for rent. It is an all-season, luxury resort offering golf, world-class salmon fishing, sailing, skiing and a luxury spa.

Newfound has an integrated business model based on destination master-planning, which generates revenues from multiple sources, including freehold land sales, construction and development, services to owners, the provision of leisure activities and the operation of concessions. Newfound is building an industry leading, world-class luxury lifestyle brand offering exceptional holiday experiences in luxurious homes, situated in locations of outstanding natural beauty.

Newfound's shares commenced trading on AIM on September 26, 2006. Newfound N.V. is incorporated in the Netherlands with operations in Canada, St Kitts & Nevis, UK, USA, Netherlands and Germany. "

It is possibly time to take all this waffle off the site as the company, while it may have an 'integrated business model', very obviously doesn't have a business model that works in this day and age.

According to the Resorts section of the Newfound site:

"To date, Humber Valley Resort has sold over 400 vacation properties to buyers from the UK, Ireland, Europe, the US and mainland Canada. More than 200 chalets are completed with several others under construction. In addition, the resort has recently released a number of beautifully finished and extremely spacious one- and two-bedroom apartments. The majority of properties are available for holiday rental and benefit from first-class services and amenities including fine-quality appliances, furnishings and linens, whirlpool baths, saunas and outdoor hot tubs."

The board of Newfound are:

Jayne McGivern, Chief Executive Officer
Stephen Bentley, Group Finance Director
Richard Foley, Development Director
John Morgan, Interim Chairman
Robert Weisz, Non-Executive Director

The closure of the Humber Valley Resort is a great shame as it was a wonderful place to visit and will be a great loss to the Corner Brook area of Newfoundland. It is also obviously a time of great distress to owners of property on the resort, some of whom lived there full time, who bought into the dream only for it all to dissipate in front of their eyes.

Should this bankruptcy affect you in any way Newfound can be contacted at its Global Corporate Office:

42 Bruton Place, London W1J 6PA
Telephone +44 (0) 20 7892 8300
Fax +44 (0) 20 7892 8301

If you are looking for updates on the Humber Valley story you'll find Gary Kelly's blog and the Crazy about Newfoundland blog to be exceptional resources.

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