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Prognosis for trading with criminally acquired assets

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By on CQN BLOG & Comments

So you buy a business and then find that the entire structure and assets of company are subject to a police investigation, where it is alleged that the assets were criminal acquired. That’s a serious problem, but one which will take several years to manifest. Let’s call that Problem A.

Problem B is that you have also established that the business needs to raise cash. This is an acute problem which will manifest in a matter of months.

What’s the prognosis?

It could be 2018 before a verdict on Problem A, the criminal trial, is reached. If it’s not guilty, there are no consequences. If it’s guilty, the rightful owners of the criminally acquired assets can apply to the court to recover them. This doesn’t mean they will apply, but if they do, it’s highly likely that the court will make the award in favour of the rightful owners.

For our example, the rightful owners are creditors of a failed business, represented by a liquidator. It’s the liquidators job to get as much money for the creditors as possible, and in this instance, HMRC is the creditor with overwhelming influence.

There’s an added complexity. Although none of your directors are contaminated by the criminal investigation, there’s a concern that some of the accused are beneficiaries of shares in the company, or commercial contracts which the company has entered into. In short, the accused have left the stage, but they could still have a considerable financial interest in the success of the business, which may steel the resolve of the most influential creditor, HMRC. HMRC know such tactics well and would be reluctant to allow a convicted criminal to profit from their enterprises.

As far as Problem A is concerned, you have to allow the law to take its course and hope for a not guilty verdict. Should a guilty verdict transpire, you then have to hope to cut a deal with the liquidator (representing HMRC et al) to allow you to continue to retain title to the assets.

If the creditor was malleable, willing to come and go with you, this would be possible. Especially as the liquidator may have the opportunity of pursuing the professional indemnity (PI) insurance of some of the accused, who provided professional services relating to the transaction. Grab the PI money for the creditors and allow you, your shareholders, and the beneficiaries of your commercial contracts, to continue to benefit from ownership of the assets.

A great deal of uncertainty surrounds this, however. You would make it your business to get as close as possible to the liquidator. Make sure there’s no limit to the hospitality on offer, but ultimately, HMRC will decide how matters proceed. It may even be the case that PI money is pursued, and the assets are recovered and put on the market. There will, after all, be an eye-watering level of professional fees to cover.

Problem B is, as I said, more acute. Raising money for a business which is losing money and burning cash is difficult enough, but if there is a possibility the business has been built upon criminally acquired assets, the challenge is herculean.

The criminal trial may not conclude until 2018 (or later), and it could take a couple of years thereafter for the liquidator to petition the court for the assets and then dispose of them. In short, the assets could come back onto the market around 2020.

Problem B is for you to fund a trading deficit until 2018, then hibernate for a couple of years, and bid enough to buy the assets at auction in 2020.

In the short term all you can do is try to convince as many people as possible to become co-investors. Or put the money in yourself, of course (sorry, I know how you feel about that prospect). Then you could shower the liquidator with the kind of corporate hospitality illustrated in The Wolf of Wall St, and hope you’ve got enough credit with them to have them batting for you at the creditors’ meeting.

The prognosis? It’s not the fact that you are possibly trading with criminally acquired assets, or that your entire enterprise could be shut down with the drop of a sheriff’s gavel, that would worry me. There’s nothing you can do about that, so ignore it. The big worry is how raise the £25m to keep the lights on until you discover if you’re business’s founding fathers acted within the law.

Good luck with that.

This is an absolute minefield. No one is in control. Three years ago I suggested the best thing to do was to start from scratch at another location, this is the only way to proceed with certainty.

Share premises in Paisley, or Cowdenbeath or wherever will take you. Hope that you can carry some brand affinity (although clearly you’ll not be able to use any disputed IP, including brand names). Appoint reputable people to your board and get back to doing what you really want to do.

Behold to no one contaminated by the decades of misrule. Cut loose those who hold the onerous contracts. Allow the assets to come back onto the market in due course, knowing that by then you have all the customer goodwill you need to ensure there is no point in anyone bidding against you at auction.

The future will be nothing like the past, but at least you’ll have a future.

Celtic are the first UK club to react to the refugee crisis

“This is absolutely the right thing for us to do. Our club was formed by immigrants, many of whom had escaped the devastation of the great famine.” Tony Hamilton, Celtic FC Foundation CEO.

Proceeds from Sunday’s Jock Stein 30th Anniversary game will go to alleviating suffering of the refugees. The club will appoint a charity with expertise to ensure the assistance is productive.

I know we go on about the Foundation a lot, but it’s the most important part of our club, today and every day.  Never let this change.

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  7. gordybhoy64 on

    Almore,

     

    2 nicer people you couldn’t meet,

     

    not seen AK for a long time but seen her brother a few times in the last few years,

     

    he normally tries to get over for a couple of games each season

  11. clogher celt on

    Blantyretim,

     

     

    Sorry, thanks for that.

     

     

    Have a look at the weekend.

     

     

    HH,

     

     

    Clogher

  16. Jobo Baldie on

    Germany score.

     

     

    Table, with 3 games to play will be –

     

    Germany – 16

     

    Poland – 14

     

    Ireland – 12

     

    Scotland – 11

     

     

    Remaining games –

     

    Germany have Scotland (A), Ireland (A), Georgia (H)

     

    Poland have Gibraltar (H), Scotland (A), Ireland (H)

     

    Ireland have Georgia (H), Germany (H), Poland (A)

     

    Scotland have Germany (H), Poland (H), Gibraltar (A)

     

     

    I think Scotland will lose to Germany but win the 2 other games, finishing on 17 points

     

    Poland will beat Gibraltar and so have 17 points before they welcome Ireland

     

    Germany will beat us on Monday and win their final game against Georgia giving them 22 points

     

    Ireland will beat Georgia to go on to 15

     

     

    This will leave the position as follows

     

    Germany – 22 points plus a visit to Ireland

     

    Poland – 17 points plus a home game against Ireland

     

    Scotland – 17 points

     

    Ireland – 15 points with 2 more games to play, home to Germany plus a visit to Poland

     

     

    But if Scotland could also sneak a draw against Germany then second place could still be a possibility….

     

     

    TooCloseToCall CSC

  20. blantyretim is praying for the Knox family on

    Clogher

     

    I don’t and did not mean to be disrespectful but we all know that Celtic are not THE TEAM in Ireland

  21. 31003 on

    Drop croppie at 9.12pm

     

     

    Top right in that photo is the one and only Wee James Forrest……with a perm………J Titor comes to mind…

  23. Jobo Baldie on

    I heard He Was Dead

     

     

    Yes, a few twists and turns left. To some extent it is still in our own hands. if we could somehow secure 7 points from the last 3 games then 2nd place is still likely

  26. corkcelt on

    No BT. There is a good solid Celtic Support but the remainder are EPL supporters with a “soft spot” for Celtic or ” Celtic is our second team” after whichever EPL non-entity they support.

  29. justafan on

    Roy C….

     

     

    Great as usual!

     

     

    But 09:29….Experience and Excellence….

     

     

    Which grounds dugout is that????

     

     

    HH

  30. clogher celt on

    BT,

     

     

    That’s fine, but watch the match tomorrow.

     

     

    If Mayo win and Galway win on Sunday the west of Ireland will be the place to be.

     

     

    Even if Galway win, the City will be fantastic.

     

     

    HH,

     

     

    Clogher

  31. I heard he was dead on

    Jobo

     

     

    From here on in Ireland will probably be guaranteed 3 points more as will Scotland.

     

     

    Scotland need one draw to make sure they get 3rd from Poland or Germany.

     

     

    Beat one or both and it really is game on.

     

     

    Very unlikely.

     

     

    I’d take a point from Monday and then go from there.

  32. jamesgang on

    What’s the difference between Scotland and Praecepta?

     

     

    You always get a comeback from Praecepta!

     

     

    HH jamesgang

  33. South Of Tunis on

    Rico Rodriguez RIP…

     

     

    A big figure in my life.Man played on hundreds of fine choons..Memories of a cupboard of a bedroom in Garscube Rd and booming out Rico choons on Blue Beat. His version of It’s Not Unusual is in my to be played at my funeral box.

     

     

    The Man From Wareika LP on Blue Note is a scorcher.

     

     

    Rico Rodriguez RIP

  34. jude2005 is Neil Lennon \o/ on

    Paddy G Im fine thanks. Usual ups and all families have. Often go thru ur town and the memory rolls back to the Cafe Club and St Bridgets Sunday nite dancing. H H

  36. blantyretim is praying for the Knox family on

    Corkcelt

     

     

    Do you Honestly believe that he majority of Irish football fans support Celtic?

     

     

    More go to Manchester Liverpool or London than go to Glasgow every other weekend

     

    I blame Celtic (and not PL for a change) 8:)

     

     

    As for Roy Croppie with Jock Stein being a goalkeeper that is a sore point

  37. Careful With That Tax, Moonbeams on

    Got a funny feeling, Scotland will turn up against and beat the dour faced but practical ones ..

     

     

    Is it Tuesday ?

     

     

    Be better than two draws ..

     

     

    Might just sneak it into second…

     

     

    Here’s hoping ..

     

     

    Nothing between.. Scotland, Ireland and the Poles.

  38. Almore on

    Gordybhoy: I don’t know AK’s brother off hand but I’m sure I met him before. Unfortunately, getting over for a couple of matches per year is becoming the norm I purchased a season ticket for this season and attended the first three league matches. I hoped to get over for the Hearts match but am not able to now. The next match I’ll get over to will be in late November, if I’m lucky..

     

     

    Interestingly, the ghuy who took over AK’s role in the AICSC is a past pupil of mine

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