Supreme Court’s conclusion goes against Eratos in Sabra-bankruptcy

PHILIPSBURG — The Erato-family is on the brink of losing ownership of 38 rights of apartment after a conclusion by the Supreme Court’s Attorney-General G. Snijders. This is the story about the downfall of a real estate developer who has been in business in St. Maarten since 1974.

Seven companies associated with and controlled by the Erato family went to the Supreme Court to contest a court ruling in the bankruptcy of Sabra NV: Rainbow Beach Club Resort Hotel Facilities Co Ltd., World Tours Company Ltd., Anne’s Folly Ltd., Imperial Company Ltd., Antilles Management Enterprise Ltd., Future Enterprise Ltd. and Rainbow Beach Club Co Ltd. These plaintiffs challenged decisions made by the trustees in the Sabra-bankruptcy, the late Norbert Hijmans and his successor C.M. van der Veer.

The Supreme Court-conclusion refers to the plaintiffs as Rainbow c.s. The ruling establishes that the shares in Sabra belong to the Erato-family. “During a number of years Sabra has transferred all its assets through seven transactions to Rainbow c.s. Therefore Sabra did not have any assets at the time of its bankruptcy. The trustee has annulled all transactions based on bankruptcy fraud (the so-called Actio Pauliana).”

The trustee came to this conclusion because there is no proof that the receiving entities actually paid for the assets. The court confirmed the decision to void all transactions.

Here is what happened. Sabra was established in St. Maarten on April 9, 1974. Its objectives were buying, selling, developing and exploiting real estate. The court declared the company and Aquarius bankrupt on August 20, 2013. The Common Court of Justice confirmed the ruling on October 15. There are unsecured claims for $4,807,037 and $336,516 in preferential claims.

Sabra developed the ambitious Aquarius-project on land it owned in the vicinity of Red Pond. The rights of apartment were sold by the Aquarius Company.

Business was looking good when Aquarius sold some of the most luxurious apartments on the top floor of its buildings at pre-construction prices. Then, in 2008, the real estate market in the United States collapsed, resulting in, among others, the bankruptcy of Lehman Brothers on September 15.

Johnny Erato realized that things were going south fast. He wrote to his bank that 90 percent of his buyers were unable to meet their payment-obligations. At stake was an amount of $4.2 million. The bank granted Sabra a grace period until October 31, 2009.

Already in 2008 Sabra began with the transfer of rights of apartment to World Tours (12) and to Anne’s Folly (6). In 2009 it transferred an apartment where the mother of the Eratos lived to Anne’s Folly. In September 2010 and in August 2011 Sabra transferred another nineteen rights of apartment to World Tours (11) and Rainbow Resort (8). Lastly, in 2015, Anne’s Folly transferred the apartment where the mother of the Eratos lived to Imperial.

So all in all, between 2008 and 2015 Sabra transferred 38 rights apartment to other entities that were also controlled by the Eratos.

“Sara began in 2008 with the transfer of real estate to World Tours, Anne’s Folly and Rainbow because of the bad financial state of affairs,” the trustee noted, adding that selling these assets to third parties would have made it possible to pay off the bank loans. “Instead, Sabra transferred the real estate to keep it safe.”

The trustee produced a message from Johnny Erato to his attorney that read:  “The opposition wants to make a clean sweep, bankrupt Sabra and take over all the assets and rule Rainbow completely. But they discover Sabra does not own anything at Rainbow.”

This statement was considered as another piece of evidence that the Eratos were consciously busy turning Sabra into an empty shell.

Rainbow c.s. contested the statement that the entities had not paid for the real estate, saying that the notarial deeds are proof of payment. The Supreme Court dismissed this argument.

The conclusion by the Attorney-General is not the last step in this legal process. The Supreme Court still has to issue its ruling, though it hardly ever diverges from the conclusion of its Attorney-General. When the ruling comes down, all transferred rights of apartment return to the estate of Sabra.

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