Court upholds bid-bond for €20.7 million Jerma Hotel auction

The law courts have turned down an appeal by brothers Geoffrey and Peter Montebello of construction firm JPM Bros, that contested a €50,000 bid bond demanded by HSBC Malta for the sale by court auction of the former Jerma Palace Hotel and surrounding lands.

The property in question is owned by the Montebellos’ firm JefPet, which in 2010 was underwritten for a €9.89 million debt with HSBC. Their notary was Labour MP Charles Mangion.

The property in question, with surrounding lands, is estimated at the value of over €20.7 million according to the court decision.

In 2012, after calling in the debt, HSBC demanded that the courts put up the Marsaskala properties for auction. Then in 2013 HSBC was granted approval from the courts to demand a €50,000 deposit from prospective bidders. The Montebellos opposed the request.

But the court said that a €50,000 deposit was no onerous demand for bidders seeking to buy the €20 million property.

The lands that were put up for sale by court auction, according to the court decree, include the coastline known as il-Gzira or il-Mitquba, apart from the Jerma Palace Hotel.

MaltaToday is informed that the Montebellos are seeking the redevelopment of the hotel into residential units, a five-star hotel and a yacht marina.

Although the plans are still at their preliminary stages, contractor Charles Camilleri, known as ‘il-Franciz’ appears to be fronting the company’s plans. Repeated attempts to contact Camilleri and Peter Montebello earlier this week proved futile.

The residential aspect of the project would see the development of between 300 and 500 units, will include a hotel and it proposes land reclamation for a yacht marina.

The hotel is however also hampered by third-party claims as the Montebello brothers still have to settle outstanding claims from an accountant who demanded €3.5 million for his services to the Montebellos. The accountant was granted a precautionary warrant in court to stop the sale of the Jerma Palace Hotel and the surrounding land.

The land on which the Jerma Palace Hotel was built originally belonged to the Franciscan Conventuals and Ivan Burridge, and was sold to San Tumas Holdings, which in turn sold it to the Libyan Lafico in 1976. Corinthia used to manage the hotel through a management agreement.  

The hotel was never developed since closing down in the 2000s and then sold to JPM Brothers. At some point in 2009, the Tumas and Gasan groups were seeking advice on transforming the Jerma Palace Hotel into a potential ‘Portomaso of the south’, when JPM Brothers were hoping for an urgent sale of the property to settle outstanding loans with banks and creditors.

The application was passed to a case officer to assess the development proposal in terms of the Structure Plan and other established policies. 

Financial trouble forced the Montebellos to search for buyers for the site, namely the late magnate George Fenech and Joe Gasan. The plan never materialised: a MEPA policy undertaken by former chairman Austin Walker was that hotel development should not be turned into residential development, but kept as tourist accommodation and hotels.