George's Club timeshare development is in serious financial trouble.

Swiss-based York Hannover, which began as a real estate developer but is now into property management, cannot service its huge debts.

During the 1980s, the group borrowed hundreds of millions of dollars to build huge development projects in the United States and Canada.

It was involved in some big name developments such as the Montreal Eaton Centre, a 300,000 square foot mall in which it initially held a 50 percent stake. The Centre was later seized by its bank lenders.

A debt schedule shows that York Hannover owes $218 million to a mortgage lending Canadian-based firm called Castor Holdings, which is currently in receivership.

The group also owes millions of dollars to banks and wealthy private investors.

It was some of this money which was used to build 65 two-bedroom, two bathroom timeshare units in St. George's, which is owned by York Hannover (St.

George's).

The luxurious development comprises three swimming pools, three tennis courts, restaurant and bar facilities and affords beautiful views over St. George's Harbour.

It is not known if or how these units will be affected by the group's problems.

The group comprises a complex maze of companies in several countries -- including two in Bermuda -- whose relation to each other is difficult to track down.

York Hannover staff have referred press inquiries to Mr. David Medhurst, who is managing director of the group's parent company, York Hannover AG, in Lucerne, Switzerland.

But Mr. Medhurst, who is currently working out of the Toronto office, has failed to answer over a dozen phone calls from The Royal Gazette during the past week.

A York Hannover employee in Lucerne said yesterday: "I have special orders not to give any information.'' The general manager of the St. George's Club is Mr. Alan Marlow, who said yesterday he knew little of the group's problems.

"The only thing I'm aware of is what I've been told in the newspapers,'' said Mr. Marlow, referring to an article in the Financial Times of London about York Hannover's debt with Rothschild Bank.

Mr. Marlow said he was confident that any financial problems the group had would not have an affect on the St. George's Club, which he said was making an operational profit.

"The financial situation of York Hannover (St. George's) is good,'' he said.

"We've just finished four more units and have another four under construction.'' Current occupancy rate for the year was 84 percent, he said. Membership of the club costs between $6,500 and $25,000 for 25 years, which allows for one-week-a-year occupancy.

All but $9 million of the $79 million debt of York Hannover (St. George's) was internal, he said.

"I'm not particularly concerned because I am going to assume that, whatever happens, York Hannover (St. George's) is a going concern that has the potential to make a lot of money and will be treated as such,'' he added.

"If a disaster occurred and there was a massive liquidation there would be a cherry pick of those assets which were viable and this is a viable asset.'' The financial problems of the York Hannover group have been widely reported in Canada.

Financial journalist Mr. Brian Milner, of the Toronto Globe and Mail, told The Royal Gazette that York Hannover was facing serious financial problems and was scaling down its operations.

"There are a lot of lawsuits outstanding against the company by builders and other creditors in Montreal and Canada,'' he said.

"York Hannover still has a hotel company but a lot of the hotels have been sold or seized.'' The York Hannover group was founded by German-Canadian businessman Mr. Karsten von Versebe.

Mr. von Versebe was also a founding member of Castor Holdings, whose billion dollar collapse earlier this year is likely to make it one of Canada's largest ever company failures.