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Yes, i understand fully the concept of a limited liability company, but we are making some progress in you identifying who you think should be compensating you.
So we've gone from "the company", which might not exist for much longer, to the lenders.
So does not the same apply to bond holders who aren't shareholders in the New Co.?
Wouldn't they also have a call on any compensation as the same potential alleged fraud would have impacted their capital position, and they rank higher in the capital table of the business, so they'd logically have first call on any settlement.
Of course, as it's been demonstarted, they were the real owners of the business.
It's a bit like when you have a mortage on your house, but cant afford to make the payments, can you real say you own it..........
I bet I know what the answer; no one should be protected from loss except the shareholders. Afterall, they are the "owners" of the business.
I'll be mildly interested to hear the findings of the Supreme Court. Even if they repeal some of the current legislation and replace it with terms that are more protective of shareholders, it's not going obtain anything for shareholders of the old company. Providing Debenhams/the creditors operated within the law as it was at the time, there'll be no retrospective redress.
Atb
Shareholders have limited liability. Hence the term limited company. If it is proven that the creditors illegally took control of the company, either through there own actions or others the either the company will be returned or compensation will be determined. It's a bit like when a car is bought by a third party from a second party that obtained the car through fraud. The third party is duty bound to return the car to it's original owner.
The All Party Parliamentary Group [APPG] are seeking to change the law on so-called 'reflective loss'. Court action at the Supreme Court was brought by the APPG on 7th May via law firm Trowers and Hamlins.
Kevin Hollinrake MP, is co-chair of the APPG. He said: "The mechanisms in place for Directors and shareholders of insolvent business to obtain redress and receive compensation for creditor misconduct are unsatisfactory."
If the law is changed in this respect, then shareholders and small business owners could be able to take direct legal action against parties they blame for causing them losses when their companies fall into insolvency.
If the Supreme Court rules in favour of the APPG, it could lead to a flood of claims against lenders, administrators, and lawyers. The MPs said they were making an 'unprecedented intervention' in a Supreme Court case.'
Dislking what's happened or feeling shafted by it is not the same as it being legally wrong. Everything that happened will have been scrutinised by people with expertise. They will have sought to make sure it was above board and gave no potential for redress.
If you have no formal training or qualification in company law, it is near impossible for the layperson to properly understand it legally. Until someone with expertise states the contrary, there is no reasonable ground to do anything but trust that due process was followed. The emotional response is understandable; but long-term, probably better to give it up and move on, rather than waste even more energy on such a soured situation.
Atb
Offers are now being sought for the operations, but on tough terms that stop a buyer contacting landlords or concessionaires for 18 months – a ridiculous restriction, not least since Debenhams is now in a Company Voluntary Arrangement with creditors to reorganise its debt stack.
Does this restriction apply to the lenders and current owners? No wonder Sports Direct has complained to the FCA that this potential sale is not genuine. The Americans have ridden roughshod over UK insolvency law while regulators sit and watch.
Directors would insist that they have acted in good faith, putting the interests of the company – and therefore its shareholders – first. However, the Companies Act 2006 is clear on fiduciary duties to shareholders as a whole, as well as on exercising powers to reduce the influence of dissenting ones.
Something is up with the Debenhams process, with the scale of possible wrongs ranging from simple lack of judgement by directors, to what Ashley has described as a “long planned theft”.
Swooping magpies are a protected species unless they are shown to be a threat to conservation. What Debenhams’ directors have conserved is debatable – certainly not Ashley’s 29.7 per cent stake, at an estimated loss of £150m, nor the chance, through his rights issue, for other shareholders to participate in a turnaround.
Regulators have a duty to take a much closer look at what appears an appalling use of the pre-pack process.
Is the DEB saga still ongoing?
The BOD were crooks
As the Board deliberately put the company into administration rather than hold an EGM. To do this they deliberately loaded up with debt making the financial position impossible. They put saving their own individual Director jobs ahead of acting in shareholders best interests.
"IMO compensation is often sought from any party that benefits from an illegal act and this does not have to be the same party who committed the act."
But, that doesn't answer the question does it?
Which party should the case be bought against? the employees who kept their jobs? the landlords who agreed the CVA? the debt holders who didn't get a hair cut? the shareholders of the banks that didn't take a hit?
You could argue they've also benefited.
So now we've got the situation that a crime isn't the important thing it's the beneficiary of the crime.....so if we find out that Debenhams did infact do something wrong that effected the bond hoders, the shareholders should be called upon to compensate them.
Wonderful for bond holders, first ranking, security and a gilt edged guarantee provided by the shareholders.
IMO compensation is often sought from any party that benefits from an illegal act and this does not have to be the same party who committed the act.
" the company "
If you mean Debenhams PLC, they might have to borrow some money to do that.....
We might be able to argue the toss about the caught case IF there was caught case to argue about.
I doubt there will even by a Debenhams PLC to bring to case agains in the future, unless you are suggesting an action against the Directors? I wonder how much that's likely to deliver for the shareholders? Minus the legal costs.
Or maybe you think against the lenders? En masse or just the new shareholders of Celine?
That's your big issue with a court case.
Who do you bring it against and if it's the smallest fish, the Board, how much is it actually going to benefit the shareholders anyway.
If it is proven that rules were broken to the financial detriment of shareholders then the company will be instructed by the court to pay compensation to said shareholders. Now you can argue the toss about whether the court will or will not side one way or the other or if someone like MA or the FCA will take up the case but to state definitely that no such event will ever occur is to show a complete lack of understanding in the UK's legal system. As for your comment about the proper press, City AM may not have the titillations of the mainstream media, but when it comes to financial matters it pretty much beats all but the FT.
It's certainly, and always was, a gamble. I have very limited exposure to the debt. Even a complete wipe put wouldn't cause me a sleepless night, but I hope it does make it. If only for the employees. I'm sure on this board Sergio always will cause bad feeling, but at least the business has survived and alongside it employment for the staff.
I've now received my "consent payment", and it's good to see the penion fund is going to get some extra money. Obviously for me it's a going concern, so I'll keep posting as stuff hits my mailbox and alerts. I don't disagree with your comment about former holders.
Thanks for the link. Those latest results make dire reading. Even so, they still congratulate Sergio for his work! I still don't see them ever turning this around. Too many things going against them. Probably will end up as dead as BHS eventually.
The Supreme Court can rule whatever but former holders of equity will never see a penny as a result. It's clutching at straws -- if there was substance in this, it would be in the proper press, not just a money website.
Hope and greed?
What's all that about?
A number of us are clearly tuning into this board regularly to see how the litigation prospect is building up. Now the Supreme Court may be ruling on this sort of thing, the floodgates may shortly be opened which could very materially change things for us ex-shareholders. You cannot then blame us for keeping an eye on things?
Brings back memory from not too long ago when hope and greed were all over the board.
HH, I have lost a packet here, but there's a lot going on in the background, including a Supreme Court application that could materially change things.
Shareholders including MA were not treated fairly here, we will see what transpires in due course as this is about to hit the fan, legally. The articles from CityAM last week were illuminating.
Was that he should have called the EGM back in September, as soon as he was allowed again to bid.
All my own points of view of course and could be very much off the mark!
Silver - my intention is not to insult you but I haven't a clue what you last message means. Maybe my IQ isn't up to your level. National disgrace, injustice and conspiracy.....against shareholders? This is capitalism... you risk your capital you might loose it. I don't want to harp on about this but its integral, the lenders made final decisions re debs. My best guess is the BOD received the offer from MA, went straight to their lenders based on covenants, lenders said no based on best outcome for them and they advised they'd be putting the company into administration. So the BOD agreed to do so due to having no other options. I do think MA got stung in that when he first bought in more positive noises were there concerning revenue stabilising. The opposite occurred. Management was poor but not a crime. I'm sure MA realises his error but his ego is bruised. My ego would have me threatening all sorts of legal action if I made such a mistake /lost so much money. BTW again not to insult you, lenders own the assets, shareholders own the equity. There has been no equity in debs for a long time hence the share price slightly above 0 near the end!
Why should I accept a full right off, especially on the advise of someone who clearly benefited from this "national disgrace". Sure it's not going to keep me up at night, and I am more than able to accommodate the loss, however an injustice has occurred and fingers crossed our slow but usually just legal system will eventually get round to awarding compensation. As for your presumsions about MA, you seem to have missed every related announcement he has made since he became aware of, in his words "conspiracy" that was going on. Lastly, ask yourself this, why if this was going to be such a simple slam dunk, did CO spend so much towards the end buying up shares. Could it be he didn't want to be holding too big a net short position come suspension. People like him usually look at all the angles. To all those who never did close their short position, maybe they will receive a demand down the line when a shareholder compensation package is agreed. Now that would make me laugh.
Well you can invest in what seems a safe share and it can still go wrong - PV being a recent example. The simple fact is the greater return you are looking for - the higher the risk..
Knigelk - agree with alot of your points. I gambled here myself for a while. It was a small enough amount of my overall indexed holdings - 2%. I got out a while back. I similarly gambled on carillion before it went down. It was in it for the buzz and didn't make money. Who makes money gambling, very few. Anyways hope such shares and their demise will encourage people to invest or at the very least question their investing /gambling!!
Most shares have risk. Most shares are a gamble of sorts. That's why most invest in funds or multi holdings. The company continues to trade - thats what hurts the ex shareholders. Now we will find out if MA really wanted Debenhams to complete his jigsaw alongside HoF or whether it was all hot air. He knew the debt level already when he suggested a possible 5p bid. He is just another factor of why some shareholders feel let down. Agree though this was never a share to put more than a small amount in.. and it didn't work out for the longs