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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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  4. What is the Stars on

    Bt

     

    It’s not just Celtics fault

     

    They could be more pro active but the sky EPL mega hype is hard to compete with. Their is also an element here which takes celtic for granted. Like a Dublin taxi man who asked me who I followed ( what team I supported). When I said celtic he said’ ah we all follow celtic but who do you really support”

  9. Magnificentseven on

    Margaret McGill on 4th September 2015 10:30 pm

     

     

    Do you ever post anything that isn’t looking for a reaction?? No opinions or happy thoughts? just trolling!! Oh well

  14. Margaret McGill on

    Magnificentseven on 4th September 2015 10:33 pm

     

     

    Yeah

     

    You should read what i used to post on CQN 2009-2014

     

    But whats the point now?

     

    Oh well

  18. Gordon64 on

    An opportunity missed by Scotland tonight. Beaten by a poor team. I await the Guttless in Georgia banner at Hampden supported by our media. They wouldn’t dare.

  22. BIG-CUP-WINNERS on

    Wonder where WGS next management berth will be.?

     

     

    Wouldn’t bet against him back at Celtic park.

  25. Careful With That Tax, Moonbeams on

    Of course Labour won’t oppose our policies ..

     

     

    They’re too feckin weak ..

     

     

    Of course David .. We’re in this for the long hall!

     

     

    Tally Ho!

  27. Dallas Dallas where the heck is Dallas on

    Roy, regarding the picture of Paul when we played the maroon balloons.

     

     

    Seeing the Hearts number 2 in the picture, Walter Kidd, brings back the memory of the stickies celebrating Kidd scoring at Dens , on that magical day in 1986. They thought Kidd of the Walter variety had scored.

     

     

    Oh how we laughed

  30. Dallas Dallas where the heck is Dallas on

    Bourne, Mark Reid’s penalty in the last minute of 1984 league cup final showed what a brave player he was.

     

     

    He didn’t half blast it into the net.

     

     

    Unfortunately we lost when the cheeky chappy collapsed in heap in the penalty box and scored the resultant penalty.

  32. Gordon64 on

    I luv WGS but he got it wrong tonigtht. Fletcher up top on his own was ineffective. We created next to nothing. Not for me.

  35. sipsini on

    Wits/bm…

     

     

    I’m not a punter but my da is, if I put a few quid on the horse and write best odds, do I get it at the top price?

     

     

    According to my da I should, he’s a bit old now and can tend to haver.

  36. roy croppie on

    Dallas Dallas where the heck is Dallas

     

     

    As Big Billy said, ‘there is something special about our club.’ Yes we have disappointments but when it all falls into place it is magical.

     

     

    hh

  37. gordybhoy64 on

    sipsini,

     

    on line you normally always get best odds,

     

    in shops only some bookmakers offer best odds and its only at certain times of the day

  40. BOBBY MURDOCH'S CURLED-UP WINKLEPICKERS on

    SIPSINI

     

     

    Not as easy as that!

     

     

    Some shops have a best-price policy at certain times,though not all.

     

     

    Betfred is usually 1130-1330,Paddy Power similar. Write out the slip and ask at the counter.

  41. RobertTressell on

    Sipsini – the parlance I use for that is ‘take the price’s – in other words you or the bookie indicate the odds that were offered atvthe time you took the bet. If the odds go from 14-1 to 12-1 and you’ve got 14-1on the line you get 14-1

     

     

     

    And it works the other way too…

     

     

    Others might explain it better or have a different opinion but that is how I understand it….

  42. Dallas Dallas where the heck is Dallas on

    Sipsini, good post about our one time hero, Charlie Nicholas.

     

     

    I read the Cqn magazine article about our former youth player, Sean McBride. It was a great read. It showed up guys like Nicholas and Walker and their attitude towards us now.

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