The Brazilian arm of social housing developer EcoHouse remains active, despite its British counterpart being forced into liquidation last month.
The news may come as some relief to the Southeast Asian investors who have sales and purchase agreements with the South American company.
It has been widely reported that as many as 1,000 individual investments in the Brazilian social housing developments in Natal, Northeast Brazil, were made by Singaporean and property investors from other parts of Asia including Malaysia, the Philippines, Hong Kong and Thailand between 2011 until 2013.
Less than 12 months ago one of the company’s developments won ‘Best Brazilian Project’ at the 2014 annual industry MIPIM awards in Cannes, France. The event is widely seen as the ‘Oscars’ of the global property industry.
Now, Renata Sa, a London-based qualified Brazilian Lawyer and regulated by the Solicitors Regulation Authority from Brazil Property Lawyers, is actively working for some Singapore investors.
She said: “The sales and purchase agreements signed with Ecohouse Brasil Limitada are rather vague and confusing when it comes to dispute resolution proceedings and laws applicable to question matters other than those related directly to the purchase and sale of the unit.
“Although the contracts stated that ‘… in the worst-case scenario investors are left with a house in Brazil’, most of the houses have not been built to date and this is unlikely to happen in the future.”
She confirmed that the judge in the first lawsuit filed by Brazil Property Lawyers against Ecohouse, justified her decision by expressly recognising that Ecohouse is in default of its contractual obligations toward the investors, and is not likely to comply with these in the future due to its unknown domicile.
The judge said that Ecohouse unjustly enriched, at clients’ expense [a] façade to deviate funds from Singaporean clients and promote illegalities.
The judge added Ecohouse was incorporated and operated with the main purpose of enabling its shareholders and managing directors’ legal obligations to be evaded, through fraudulent and misguiding acts, which ultimately justified the disregard of its legal entity to hold shareholders and directors personally liable for the obligations of the corporation, and the real risk of the defendants’ assets being dissipated until judgement can be enforced.
Sa confirmed: “In addition, the land where the projects were supposed to be built is still registered into third parties names. Therefore, we are working on alternative routes to recover our clients’ funds, not only from Ecohouse but from all the engaged companies in joint-venture agreements. Several assets have now been seized on our clients’ behalf.”
It has been reported by local media in northern Brazil that federal police there have moved to close operation and seize documents from the company.
Back in the United Kingdom David Christian Chubb and Robert Nicholas Lewis of PricewaterhouseCoopers LLP were appointed as the joint liquidators of EcoHouse Developments Limited last month.
The British Police has also confirmed is it investigating the company, and a winding-up order was due to be lodged with the High Court in London by the U.K. tax authorities against the company early last month. It is likely this involves non-payment of tax and/or wages.
An earlier meeting called by creditors of the British company was told: “It has been proved to the satisfaction of this meeting that the company cannot, by reason of its liabilities, continue its business and that it is advisable to wind up the same and accordingly that the company be wound up voluntarily.”
However, speaking to U.K. newspaper The Sunday Times from a hotel in Dubai yesterday, company founder Anthony Armstrong-Emery insisted: “I am not going to apologise for who I am or how I act. I’m not here to say I’ve done anything wrong.”
He used an interview with the British broadsheet to deny he intentionally created EcoHouse, as some investors have suggested, with no intention of fulfilling promises.
The British newspaper, which tracked down the larger the life Armstrong Emery, claimed he did not mislead investors.
“No, I don’t think I misled them. We thought about every single aspect,” he said. “We presented the company in a suitable fashion to the kind of market we are investing in. I have been told by investors that we guaranteed returns . . . we didn’t guarantee anything. Yes, we said 20 percent return.”
In the revealing, in-depth interview, Armstrong-Emery concluded: “The rumours of me sitting somewhere having a great life with millions of pounds in a bank account? It’s ridiculous to even think that. I’m not even going to answer it.”
Image: (C) PropertyGuru 2015. Work continued on the Bosque initial phase development in Natal, October 2013.
Andrew Batt, International Group Editor of PropertyGuru Group, wrote this story. To contact him about this or other stories email andrew@propertyguru.com.sg
