It was meant to be the transaction that paved the way for a new luxury hotel that would offer much needed rejuvenation for tourism in Bermuda’s capital.

But for more than two years the Corporation of Hamilton’s move to guarantee an $18 million loan to Par-la-Ville Hotel and Residences Ltd from Mexico Infrastructure Finance to help fund the development has been clouded in mystery after the money seemingly disappeared.

Now liquidators and receivers, acting for three claimants, believe they have found where the money went and are seeking to recover the cash at the High Court in London.

The background to the saga began in July 2014 when developers PLVHR secured the $18 million from MIF. The purpose of the loan was to finance the costs that PLVHR would incur in arranging the finance required for the hotel construction.

The proceeds of the loan were transferred to the Bank of New York Mellon to be held in an escrow account. After fees were deducted, this account totalled $15.4 million.

Then, under an agreement between PLVHR and businessman Robert McKellar, $12.5 million was transferred to Mr McKellar’s firm Argyle Limited through a trust called the Skyline Trust.

The particulars of claim, which were filed with the High Court in October 2016, state that Argyle would “would use PLVHR’s funds ... for speculative securities trading over the course of one year”. The claim continues: “Argyle was due to distribute the net profits on a weekly basis and in any event was to pay the trustees no less than $18 million (the base profit) by December 31, 2014.

“PLVHR was also due to repay the loan to MIF by December 30, 2014. No such payments were made by Argyle.

“By an e-mail to PLVHRs lawyers dated December 24, 2014 Mr McKellar acknowledges that Argyle’s ‘obligation is to pay the $18 million to the trustees ... and do so as soon as possible given the timing of receipt of funds’.

“He further promised that Argyle would make a contingency payment to the trustees for $300,000 and that the ‘larger $18 million payment will be made on or before the end of January 2015’. “By a further e-mail dated December 31, 2014, Mr McKellar noted that ‘the payout is due in January for the $18 million’ and proposed making an immediate payment of $375,000 to PLV’s lawyers.

While this payment was subsequently made, no other payments have been received.”

At the end of 2014 PLVHR defaulted on its repayment obligations and MIF began legal proceedings to recover its money.

In October 2015 Mike Morrison and Charles Thresh of KPMG Advisory Ltd were appointed Joint Provisional Liquidators of Par-la-Ville Hotels & Residences Limited by the Supreme Court of Bermuda. They were also later appointed Joint Receivers for the Skyline Trust trustees. Meanwhile, in July 2016 Mr Thresh and Samuel Moses Vidal Cohen, of Benady Cohen and Co Limited in Gibraltar, were appointed as Joint Liquidators of Argyle Limited.

The Corporation of Hamilton was initially found to be liable for repayment of the MIF loan as the loan’s guarantor at Supreme Court in May 2016. But the City’s legal team mounted a challenge to that ruling claiming the Corporation’s administration at the time did not have the authority to guarantee the loan.

This legal challenge was upheld by the Supreme Court in Bermuda in November, last year. This ruling has now been appealed by MIF and is due to be heard at the Court of Appeal in Bermuda on March 22.