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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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  14. BOBBY MURDOCH'S CURLED-UP WINKLEPICKERS on

    THELURKINTIM

     

     

    Will do,bud. Soon as I finish-which is usually a sight earlier than this,btw!

  15. Jobo Baldie on

    Good morning friends from a fortunately repetitive dry, bright, clear skied, beautiful East Kilbride.

     

     

    My, I’m going to miss this place for a week when I fly out early tomorrow morning to hopefully equally sunny Alvor for a week’s golfing holiday. And, yes, I can’t wait!

     

     

    Look after this place and keep it tidy bhoys and ghirls ;-)

  18. TheLurkinTim on

    Jobo,

     

     

    ure @ it…..it was grey…..not now…..blue skies coming your way

     

     

    WestofyourweathercCSC

     

     

    H.H.

  19. blantyretim is praying for the Knox family on

    Hunderbirds

     

     

    I’m listening to all together now on spotify

     

     

    We are all tims some have different ways of showing support

     

     

    Like you I love the fact that my 15 yo daughter has the bug, hopefully I can get it back, I don’t find it entertaining anymore and find my money goes to minis enjoyment of Celtic so at least I’m supporting Celtic financially if not in person

  20. BOBBY MURDOCH'S CURLED-UP WINKLEPICKERS on

    THELURKINTIM

     

     

    Hootenanny info sent,mate.

     

     

    If anyone else wants the details,either check your mail from Tuesday,or mail me at

     

     

    bmcuwp@gmail.com

  22. Parkheadcumsalford on

    Morning all.

     

     

    Misty and cool down here but we’re promised better later.

     

     

    Hope Scotland do better against the Germans than they did against the Georgians. Can’t see it, tbh.

  23. BOBBY MURDOCH'S CURLED-UP WINKLEPICKERS on

    PARKHEADCUMSALFORD

     

     

    If history is anything to go by,we’ll beat Germany and Poland. And lose to Gibraltar to crash out.

  24. jamesgang on

    Absolutely stunning autumn morning. Could barely see through the low sun as I left the house. 6 degrees – brrrr!

     

     

    And the forth valley immersed in mist. Now arriving into a stunning Edinburgh.

     

     

    I actually think that Scotland may find more space versus Germany than they did against Georgia cos the Germans won’t feel the need to play 5 at the back. We may wish they did when they plough forward in attack!

     

     

    HH jamesgang

  25. Pogmathonyahun aka Laird of the Smiles on

    Good morning from a rather dreich Nerja! Scottish weather apart from the temperature.

  26. ger57 on

    Macjay

     

     

    Boris Johnson, the genial buffoon who advocates air strike diplomacy. Similar to the gunboat diplomats of the Victorian era and for similar reasons. These diddy nations will buy our weapons and oil technology or we’ll bomb the s..t out of them. Btw, what happened to our much vaunted Middle East peace envoy who was responsible for causing the whole clusterf..k in the first place? Oh that’s right; he’s too busy making £14m per year in lecture tours from his American paymasters.

     

    Give us your opinion by all means but don’t insult our intelligence with Boris “Bullingdon” Johnson.

  29. South Of Tunis on

    Horribly hot and humid – way down south.

     

     

    Hit 40 at 5pm yesterday.Wowee electrical storm for 10 minutes followed by a wee bit of rain full of sand. Everything stained red this morning .Horrible, to move is to sweat.

  30. BOBBY MURDOCH'S CURLED-UP WINKLEPICKERS on

    SOUTHOFTUNIS

     

     

    That’s nothing,mate. Dreadful summer here. To move is to get soaked-wi rain.

     

     

    Nowhere in Scotland recorded more than six days above 70F,21C.

     

     

    Mind,six days of your weather would kill me!

  31. The Battered Bunnet on

    Pogmathonyahun

     

     

    Lovely own, enjoy yourself. Maybe today’s a good day to drive up to Granada and walk through the Alhambra – it’s about an hour’s drive way.

     

     

    BTW, when the sun comes up, there’s a cracking beach about 5 miles up the coast, past Maro. Playa el Canuelo. Take the coast road out of town and follow it north, you’ll come to a roundabout after 8Km with a sign for the beach (ignore the parking places along the cliff top).

     

     

    The car park is about 300m above above the beach, a long walk back up!, but there’s a wee bus that runs up and down the track all day. Beach itself is 0.5 miles long, shingle like they all are on this stretch of coast, but largely deserted.

     

     

    The cliffs calve huge limestone blocks into the sea, attracting/supporting the marine life, and with the water very clear, it’s great diving/snorkelling.

     

     

    If that sounds like too much activity, bring a book and the suncream and enjoy the peace – you’ll have the place to yourself. There’s a good restaurant/bar when you get the notion.

  33. Jungle Jim Hot Smoked on

    TBB

     

    Perhaps they are in that bar. Someone needs to support it if the place is always deserted!

     

     

    JJ

  34. BOBBY MURDOCH'S CURLED-UP WINKLEPICKERS on

    THEBATTEREDBUNNET

     

     

    I reckon people read your post and that of SOUTHOFTUNIS and logged into any and every tour operator they could find.

     

     

    My Mum,sunworshipper that she is,told me weeks ago that this summer has given her S A D. Unfortunately it was too busy a summer for other reasons for her and my Dad to eff off to Murcia.

     

     

    I think that’s Priority No 1 as soon as I head back to Swindon after my trip home,catch Los Ultimos Rayos del Verano.

  35. Jungle Jim Hot Smoked on

    I was reading a short story this morning and this made me think of Sevco:

     

     

    But there`s this about penance, it pays all debts, and leaves the record clear.

     

     

    0:-)

     

     

    JJ

  36. timbhoy3 on

    Funny when Scotland get a bad result the liquidators blame the Celtic Players.and all this that Scott Brown getting it tight on Twitter from Celtic Supporters. I for one ain’t buying that.that’s the liquidators.infiltrators mixing again

  37. BOBBY MURDOCH'S CURLED-UP WINKLEPICKERS on

    JUNGLE JIM HS

     

     

    Unfair,old bean. You know that penance has Timmy connotations. It doesn’t sit well with their WATP mentality.

     

     

    Mind you,they’ve been complaining for three years now that they are being victimised and bullied. And that shouldn’t sit too well with said WATP mentality either.

     

     

    Another wee spanner to throw in the works next time I ‘discuss’ things wi one…

  38. Jungle Jim Hot Smoked on

    BMCUW

     

    As their current team seem to be playing well, ” I predict a riot ” could become more than a song title o:-)

     

     

    Off to Alyth for our final Golf Match of the `summer`.

     

    Cheerio for now,

     

     

    JJ

  40. BOBBY MURDOCH'S CURLED-UP WINKLEPICKERS on

    JUNGLE JIM HS

     

     

    Enjoy Alyth,bud. As for the newhuns I predict a disaster.

     

     

    Well worth remembering that the song you referenced is from an album titled Unemployment…

  41. corry on

    Re the “Champagne Charlie” article ….I have been told by “the highest authority” that is was not £400 per week but was in fact a “last and final offer of £226”!!

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