Prognosis for trading with criminally acquired assets


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.

Click Here for Comments >

About Author






    Another example of how abysmally we were run at the time.



    Strange thing as a result of Charlie leaving. We signed Brian McClair as a replacement. He stayed for four seasons and was our top scorer in that period before more board fusterclucks led to the departure of our entire strike-force,plus Murdo.



    He was signed by the same manager who sold him,yet never scored a goal for him!

  2. Scottish referees party of 5 boarding London City flight out of Glasgow.



    Self importance dripping off them



    Going for a celtic view.

  3. blantyretim is praying for the Knox family on




    Few years since I’ve been but a great place, never been in October though



    Plenty of Celtic boozers to watch The Motherwell away match in and if you have kids good entertainment for them also




    Thanks for posting that article. If others are up for a debate on macro economics, I’m in. But I don’t want to scunner the non politicos or scare away the right wingers.



  5. Silly boy Mario .



    Mario Balotelli marked the signing of his on loan contract at AC Milan by buying a super duper Lamborghini .He then got caught driving the Lamborghini at 90kph in a 50kph zone . Mario’s defence was ” I didn’t know how fast I was going ” . Judge suspended Mario’s license for 3 months..



    That done , Mario had nothing better to do than post a video of himself on social media ——–pointing a mega powerful double barrelled gun at the camera .

  6. macjay1 for Neil Lennon on

    To those of you kind enough to respond to my posting of Boris Johnson`s views on the current crisis in the E.C.,many thanks.


    I would have hoped that the ball would be played rather than the man.



  7. Great post Paul, I haven’t read back so if this has been covered I apologise. Our great club was indeed founded on the premise to ease the financial burden of the poor in the east of Glasgow many of whom were Irish immigrants, however there was no “famine”, to label that time in Irish history as “famine” is to ignore the truth. The term “famine” suggests there was no food but we know there was more food exported from Ireland during those years than in the previous five years, the British governments policy’s which resulted in the Irish farmer having so little land his only option was to grow potatoes to earn money, when the crops failed he was left impoverished whilst enough food to feed the country’s population five times over was exported . This was no “famine”this was genocide and to continue to label this time as “famine” is to continue the lie .



  8. Getting it right .



    Comment on a blog after Italy 1 -Bulgaria 0 .



    “Good things –



    We won .



    We played better than we did v Malta .



    Bad things –



    This is a really bad team ..



    If we qualify , any good team will beat us easily .”





    I didn’t see very many comments about the article. Mainly because he is not really taken very seriously over here.



    In much the same way that ‘if it looks like a duck’,etc so it is with Boris.



    He looks like a prick and behaves like one.



    He may be very successful and possibly even quite intelligent,but he would never be my go-to guy to back up an opinion.

  10. Captain Beefheart on

    Gooood mornnnin all.



    Germany will thrash Scotland. Lovely goal from Lewandovski against the Germans. What a build up. He should have scored two though.

  11. My support for Lawwell and Deila, being officially withdrawn, will see out this forthcoming EL fiasco with muted discontent, safe in the knowledge that any vocalising of alternative visions for Celtic will be drowned out by the ‘You must be a manky-hun-brigade.’



    No matter. better to be consciously supportive for change than to blindly follow the perennial Celtic one-trick pony show of better luck next time.





    It was a famine if you were starving,and I’m sure those who were lucky enough to live-whether in Ireland or elsewhere-thought themselves the lucky ones to survive An Gorta Mor didn’t bother much about how it would be recorded in history.



    FWIW,I agree with you. But it is known as The Great Famine. Like The Easter Rising,despite the outcome only being a result of failure on both sides,and much after Easter.



    Nothing wrong with accepted terminology when it works. Both of them do. Historically questionable,maybe. But successful means of remembering where we came from.



    IMO,of course.





    I’ll still support Ronny because I don’t fancy the alternatives.



    Apart from that-join the club!

  14. macjay1 for Neil Lennon on




    I completely understand that.


    Do me a favour,Bobby.


    Read the article.He raises some points which should be given an airing.


    The current population influx to Europe has ,imho,the potential for serious consequences for the E.C.


    The fascists are already out in some little force…..Dortmund,I think.



    Elected Mayor of London on successive occasions 60 odd percent and 53 apparently a multicultural electorate.


    Anyway,I like eccentrics. :-)

  15. marky68 on 7th September 2015 11:39 am



    And of course they weren’t technically immigrants, they were internal displacees, relocating within the same state.



    Though you’d be forgiven for thinking otherwise, given the reception they received in the black country with the cold heart.