Exit Now - Exit Later - Is There Any Difference?
by Chantal Desjardins
Exit now, exit later, exit much, much later - what is the difference?
ALL of them involve a major change in the timeshare agreement. The fundamental question we will be faced with when we answer "exit or stay" in the coming BDO survey is this - will the "exit plan" be equitable for ALL owners? Logically, everyone wants an exit - the only difference is "when".
Should one group pay more to exit because they want it sooner than others?
Should a second group not pay at all because they have been in default for years and can't be found or collected "affordably"?
Should third group pay nothing for their exit because it's not "immediate" and also obtain a substantial amount of funds from the first group to top up the reserve fund, renovate the resort and pay lower maintenance fees simply because they want to exit - but much, much later?
We ALL own deeds - deeds that cannot be sold individually on the open market, deeds that have become a ball and chain around the legs of most owners - except perhaps those who live in blissful ignorance of the issue and of the financial status of our resorts. Most informed owners seem to be in agreement that the deeds and their ensuing "in-perpetuity" ownership must go, however the "how" is a source of conflict.
Comments alarming to those who want to exit "now" have been made by certain persons, and certainly others agree but aren't saying it out loud. Here's a sampling:
No one said that it would be a "free" exit".
Should a large group who want to leave and are allowed to break their contracts be allowed to just drop out for free?
Those who leave should at least have to pay their 2021 fees for that privilege.
Those who leave should forfeit any value their deed has in a sale if they want to leave now.
Those who want to stay should be put in certain buildings kept for a "new" resort, the remaining buildings sold and the proceeds kept to build up the reserves and lower maintenance fees.
No one is going to allow a large percentage to drop out and leave the ones who want to stay with the bill to fix the resort.
There's some cognitive dissonance going on in many of those statements - brought on by the desire to have the best outcome for one's personal stand (in this case "stay for now", "exit much, much later"). Why does this third group expect another to "contribute" more than they themselves want to, for something entirely to their benefit - especially when we ALL expect the exit issue to be corrected?
Therefore, let's not all just assume that the processes to resolve our problems will happen "organically" and fairly, given the original focus on restructuring - to the exclusion of even the word "exit"- in the pre-filling documents prepared by BDO and the boards. There was certainly a reason behind that focus so let's not just assume it has been abandoned.
Let's also not assume that the status quo will continue with Wyndham/SVC in its role as developer/owner/exchange company - they have chosen not to take a place on the consultative committee even though they were offered one. One should wonder why…
These resorts are FAILED resorts - with 1 in 4 owners delinquent and a large number of owners who are not yet delinquent, but want out now, and others later - with no mechanism in place to facilitate that. These resorts have too large a shortage of funds - both operational and reserve - to allow them to stay afloat more than a few more months (not years) into the future without a large injection of cash or a complete structural change which includes the sale of assets. This is why the courts have been asked to intervene. The burden of proof to show they can be solvent again, as well as to show that they can become an attractive, in-demand destination for years to come, lies with those in favour of restructuring. Can this be done equitably without penalizing any current owner? There is room for doubt - these resorts have already failed - spectacularly.
When the BDO survey comes out - if the focus of the questions appears to be on "restructuring" - as was the content of the original proposed court order - ask yourself what you ultimately want - exit or stay.
- If you chose "exit" are you ready to assume the financing for part of the restructuring
plans, even if you will not benefit from these?
- If you chose "stay"ask yourself whether that goal is likely to be achieved fairly for all -
or at higher cost for one particular group - because in fact, we ALL want an exit whether
it is now, later or much, much later.
Let's not be complacent! We must continue to question and discuss and take action when appropriate. Let's be vigilant and watch the next steps taken by the Administrator (BDO) and the Applicant (our Boards). Let's not hesitate to take action if we need to.
Better to have a fair outcome than a "quick" outcome. That is today's message.