The latest Investing Matters Podcast episode featuring financial educator and author Jared Dillian has been released. Listen here.
OofyProsser
Ok cool, I did not know that. I thought that the company concerned can suspend it only by the actual act of filing the required documents rather than by simply informing Companies House of the steps it's taking to comply. Good to know. This way or the other, if they don't comply on time, they will be removed from the register.
There is no magical document that will stop the strike off action, it is just a matter of time. Compulsory strike-off action can be suspended for variety of reasons. The most common reason for a company strike-off procedure being rejected or suspended is if HMRC believe that the company has unpaid tax liabilities such as VAT or corporation tax. Objections can also be raised by other interested parties such as:
- Creditors who have unpaid bills with the company.
- Anyone who has proof that the company has traded, or changed its name within the last 3 months.
- Any interested party who was not informed by the directors of the application to strike-off the company.
- Anyone who is currently engaged in legal proceedings with the company, or is taking action against the company to recover debts
This way or the other it will be removed from the register, it's just a matter of time. 100%. Companies House always do it.
OofyProsser
No problem, thanks for responding.
OofyProsser:
"So precisely how they got from being declared insolvent to being bid for at £1 by Prism, and that bid accepted, is a mystery to me"
Correct. They haven't gone go into administration, have not appointed any insolvency practitioner or administrative receiver either. I just did some reading on "insolvency" that could be a key to the mysterious sale. The interesting part was that "The principal focus of modern insolvency legislation and business debt restructuring practices no longer rests on the liquidation and elimination of insolvent entities but on the remodeling of the financial and organizational structure of debtors experiencing financial distress so as to permit the rehabilitation and continuation of their business" and then "Implementing a business turnaround may take many forms, including sale as a going concern.....". The question that remains is: how? How come BOD just agreed a sale for $1 without shareholder vote?
PS. Even in my bravest dreams I don't expect to receive any financial payout, just want to understand the process. Wonder who could shed any light on that sale process? Any idea where to go with it? Clearly it cannot be a complete mystery, it must have been done based on something and there must be people who at least understand the logic behind the process.
Another intriguing part of the from 17 December 2020 is:
" Further to its announcement on 6 October 2020, the Company today announces that it has entered into a definitive agreement with Global Fintech Investments Holding AG ("GFIH"), an affiliate of Prism Group AG ("Prism") to sell to GFIH the entire issued share capital of Finablr Limited" and then "The completion of the Transaction is subject to customary conditions, including the receipt of certain regulatory approvals".
Do you think that "shareholder approval" could in fact be included in the "customary conditions" term mentioned in RNS? That would basically mean that BOD "has entered into a definitive agreement to sell" with Prism on behalf of Finablr and that is now subject to customary conditions (read: shareholder approval) and certain regulatory approvals. Or am i just making this up?
In the first RNS mentioning the sale dated 06 October 2020 they DID say that "After due consideration the Board has approved the offer and the Company will proceed to negotiate a share purchase agreement with Prism documenting the terms of the transaction and seek shareholder and regulatory approval".
OofyProsser
Thanks, question: do you generally have any knowledge about the rules governing the sale of a listed company (or its subsidiary) lets say in a normal civilised environment (not in the middle east)? It needs to be approved by shareholders right? Is it 50% plus one or other majority that is required? I was just thinking, Shetty owns 64% or so shares in Finablr, if he simply agreed to it the deal could go through. Or, if he's under investigation and huge irregularities (fraud) are being discovered etc. maybe there are some rules allowing BOD to take over the control of the entity and simply sell company without his consent providing it is in the "best interest of the company" in the circumstances? Could this be that simple?
PART 2
The most worrying is the following sentence:
"The completion of the Transaction is subject to customary conditions, including the receipt of certain regulatory approvals"
So they replaced "shareholder approval" with "subject to customary conditions" whatever it means.
That's why I keep banging about that sale for $1 without shareholder vote and approval. Dodgy as fck. What's really happened there? Anybody?
PART 1
Denny
Yes true, the RNS from 06 October 2020 said that "....and seek shareholder and regulatory approval" BUT....
In RNS from 15 October 2020 they already hinted a nominal consideration: "The proposed core terms of the Transaction remain those set out in the 6 October Announcement, namely the restructuring and settlement of the debts of Finablr Limited and its subsidiaries, the provision of working capital for Finablr Limited and its subsidiaries and the restructuring of the board of Finablr Limited and its subsidiaries, and will involve only nominal consideration being paid to Finablr plc."
And then, in RNS from 17 December 2020 they say: Further to its announcement on 6 October 2020, the Company today announces that it has entered into a definitive agreement with Global Fintech Investments Holding AG ("GFIH"), an affiliate of Prism Group AG ("Prism") to sell to GFIH the entire issued share capital of Finablr Limited, the Company's wholly owned subsidiary. Finablr Limited owns the entire remainder of the Company's group (the "Target Group" and the "Transaction"). The Transaction will constitute the sale by the Company of its entire business and operations. Prism has formed a consortium with Abu Dhabi's Royal Strategic Partners ("RSP") in connection with the Transaction, as further described below.
Terms of the Transaction
The completion of the Transaction is subject to customary conditions, including the receipt of certain regulatory approvals.
In return for the transfer of the Target Group to GFIH, in addition to the nominal initial consideration of US$1 payable, GFIH is providing working capital support to the Target Group to enable it to continue to operate and to support various stakeholders in the Target Group, including employees and creditors of the Target Group. In addition, GFIH will undertake to support and facilitate the Company's continued efforts to recover funds from third parties in respect of possible historic wrongdoing within the Group. In this regard, subject to certain conditions, the Company and GFIH have agreed that GFIH shall pay to the Company, by way of additional consideration, a further amount equal to 25 per cent of any such funds received by the Target Group from third parties, up to a maximum of US$190,000,000. GFIH has also agreed certain provisions with the Company relating to the coordination of efforts to investigate possible historic wrong doing within the Target Group."
They NO LONGER mention shareholder approval. Looks like BOD just sold the company for $1 to Prism without shareholder approval. It says it will "continue to operate and to support various stakeholders in the Target Group, including employees and creditors", but again, nothing about shareholders.
OofyProsser
Thanks, Yeah I've seen that. It's just a register, it means nothing. When I was chasing debtors we were told that this is a standard procedure by Companies House when the company fails to submit the required documents. We were also told that HMRC and/or creditors can apply at anytime to reinstate the company to the Companies House Register if it has already been struck off. They can then force it into compulsory liquidation in an attempt to reclaim the money they are owed. Apparently that's the way it works: creditors have to first force the company into compulsory liquidation if they want to reclaim the money they are owed. Normally if the company is still trading and there are still assets left, obtaining a favourable judgement and appointing High Court enforcement officer is enough to seize goods or repossessing property. Obviously here it's not that simple because there there are no assets left. Therefore our best bet would be to force the company into compulsory liquidation first and then go after the individuals who perpetrated the fraud. That's the theory. In practice, go and try finding some Indian / Arab executives who just stole a billion dollars in the middle east and conduct a successful investigation / prosecution ;) Trust me, with that kind of money a new identity is not an issue in some parts of the world.
Indomie
I agree. The scary thought is that it can really happen anywhere, anytime, and in any company. Literally anywhere. And nobody will even lift a finger to prevent / prosecute those responsible for that mess. It was well over $1billion for goodness sake, imagine what's going on behind the closed doors in all those listed companies with "trusted" BODs where people invest their hard earned...Terrifying.
OofyProsser
"As to the rights of shareholders - they own the business and hire the management. If the latter are so dishonest or incompetent as to drive it to bankruptcy, the shareholders are always the ones who carry the can. They can’t expect to benefit from the potential upside in their investment without accepting the risks. If they lose their investment following the creditors’ needing to safeguard their own interests by appointing a receiver"
I get that but the process hasn't been followed. Finablr has never officially gone into administration. Yes, the fraud has been discovered, and yes, it was investigated. But no actual administration. At some point Prism Group just made the bid paying $1 and the deal was simply accepted by the Finablr board. How? This clearly isn't right, is it? There is a process to it and there is a process for creditors to follow too: pursue legal action, obtain judgement, force company into administration, enforcement, recover what's left, sue management and BOD individually (misappropriation / insider fraud). All bankrupt companies go through the process. I still can't see how it is possible (let alone legal) to proceed with sale for $1 without any shareholders vote while the company is still operating (clearly BOD was, if they approved the sale)?
Am I missing something?
PS. And the EY....they has resigned as the auditor as if nothing happened.....No problem, no questions asked. Oh yes, I forgot, they "do not take responsibility for the financial statements on which they form an opinion".....It would be nice if at least they took responsibility for their opinion based on which the investors form their opinions......
"But whatever the legalities, the fact is it was bust and the Prism deal was the best offer they got"
I know but I think that's not the point...Bust or not, rules / laws are there for a reason. You can't be just making a decision to sell something without owners (shareholders) approval.... And yes, shareholders in the original version of Finablr are no more likely to see a return on their investment, but again, that's not the point.
I personally took a hit, wrote it off and moved on already. It is what it is. There is not viable way for me to pursue / recover the losses. It is what it is But to be honest these two (FIN and NMC) completely changed the way I look at investing in any shares and risk in general. Unthinkable. Just unthinkable. The way it happened and the way it's been handled. And how easy it is to just get away with it. Any financial statement audited by any accounting firm (even the biggest and the most reliable) is potentially worthless. And any BOD in the world can do exactly the same tomorrow. And there is a good chance that they will get away with it. Regulators are worthless too. And so are lawmakers / judical system. Unbelievable. It completely changes the way one assesses the risk associated with investing in anything. After that I no longer hold any stocks, I moved on to investing in things I can control. Stock markets are no longer an option. A lawless land, fkn jungle. No, thank you.
OffyProsser
True, the brothers could as easily have done it without his knowledge (at least in theory) but I just find it difficult to believe that amount of debt (well over 1$ billion) can simply be "hidden from its board" by a couple of individuals but again we don't know the particulars (time, scale, involvement of others etc). You are also right about that "serious systems outage lasting many months" - a perfect cover up to buy time needed to cover the tracks and disappear....
I'm not quite clear on that sale though - could you clarify? Leaving aside the obvious debt, was it actually legal to proceed with sale for $1 without a shareholders vote? And was it actually decided by the Court? And was $1 "the best bid" (where there any others)? Is that what's happened? I thought at some point Prism Group was making the bid for Finablr Ltd the deal was simply accepted by the Finablr board in December with the consortium paying $1? I don't recall any actual administration there, I know shares had been suspended and e.g Xpress Money (one of FIN businesses) had its authorisation to operate withdrawn by FCA at some point, but no actual administration. I just find the whole process extremely dodgy, feels almost deliberately engineered and masterminded in advance.... But again it could just be me not understanding the process.
The same with Travelex - how can Travelex (effectively a division of Finablr) just announce that "it had placed itself up for sale with immediate effect" and ""communicated this intention to Finablr"? How is tat even possible? And then PwC announcement stating that a so-called "pre-pack" administration deal for Travelex had been reached, with the company being taken over by a consortium of its creditors. How come FIN shareholders did not even have any say?
And by the way.....we all know that the company was effectively robbed and ruined by its management / majority owner. EY saw anything wrong, FCA did absolutely nothing. Then it ceased trading, its business operations effectively ceased to exist (pandemic didn't help, did it?) and was sold to Prism for $1.
First of all, was that sale for $1 without a shareholder vote even legal? Could anybody shed some light on it? Seems dodgy too me considering the circumstances.
And even if it was there is clearly no assets in the business anyway. It is a one huge pile of debt. Creditors lost millions, shareholders lost their investments. Even if by some miracle some of the money will be recovered (i don't believe it will, it's been laundered in the middle east / asia a long time ago) it will go to creditors first. Shareholders get paid last and there won't be much to share.
The only chance for shareholders seems to be in questioning the validity of sale transaction of the company and start from there. And then you still need to recover losses from those who perpetrated the theft. And yes, the process will take years and will be extremely expensive with little hope for any meaningful results. Otherwise it's over. We've all been victims of humongous well planned fraud perpetrated by the management of the company.
Yes, FCA is a joke and so is the EY. I understand that. I'm not sure however why would anybody even hope that the shareholders of Finablr could get any shares in Wizz? Or in anything else? Why would they? The company was sold without shareholder vote, if anything we should be complaining to (suing) those who sold it on our behalf. And most importantly try to prosecute those who perpetrated the fraud.
PS. I personally think that Shetty was involved in it. I don't buy the story about "number of current and former executives at both companies who carried out serious fraud and wrongdoing, including using his forged signature to write loans, personal guarantees, cheques and bank transfers without his consent".
"Is this not merely a housekeeping issue? The company has new owners, is it not they whose vote to de-list is required, rather than the original shareholders? Finablr has gone through receivership and a reconstruction in which the previous shareholders were disenfranchised and lost their investment."
Yes, that's my understanding too.
Yup, it will be dissolved and disappear from Companies House sooner or later, 100%. It's just a matter of time. Anybody wishing to sue them ( and force it into compulsory liquidation in an attempt to reclaim the money they are owed) will have to apply to reinstate the company to the Companies House Register first.
What's the most shocking is that those crooks who took part in it are not even blacklisted anywhere. In theory, they could incorporate in UK tomorrow and just carry on as usual. And even if you can go legal, they will bury you in legal fees using your own money they have stolen from you. Regulators are completely useless, and so are the lawmakers. I read somewhere that 27% of funding for the work of the International Accounting Standards Board (IASB) comes from accounting firms (the very same accounting firms involved in all those scams) and more bits from the external sponsors..... The whole system needs a radical revolution, Limited Liability concept (and other associated concepts) are regularly used to exploit individual investors and businesses all over the world. Rotten corporate jungle, trust no one.
PS. As an investor I literally feel like I cannot trust any financial information provided by any company....Any. And there is no effective mechanism preventing and punishing corporate thievery either. Regulators do nothing, law is powerless. The culture of honesty and trust does mot exist, greed & corruption are omnipresent. Management information is credible until it's not, the financial statement present "true and fair view" until they are not, corporate thieves walk freely laughing at us all.
OofyProsser
I agree. Box-ticking culture at best, but i would not exclude "intentional, dishonest, deliberate" from the realm of possibilities either...It is what it is, I'm afraid.
a) "Auditors do not take responsibility for the financial statements on which they form an opinion. The responsibility for financial statement presentation lies squarely in the hands of the company being audited."
b) "Independent auditor is engaged to render an opinion on whether a company’s financial statements are presented fairly, in all material respects, in accordance with financial reporting framework. The audit provides users such as lenders and investors with an enhanced degree of confidence in the financial statements. An audit conducted in accordance with IAS and relevant ethical requirements enables the auditor to form that opinion. To form the opinion, the auditor gathers appropriate and sufficient evidence and observes, tests, compares and confirms until gaining reasonable assurance. The auditor then forms an opinion of whether the financial statements are free of material misstatement, whether due to fraud or error."
They basically don't guarantee anything and don't take responsibility for anything. They only "express their opinion" that is supposed to "enhance confidence". Not sure why that clownish profession full of fluid terms still exists to be honest. They lost all credibility ages ago and have been involved in countless scams since. Former EY partner was on FIN board. It's all connected. Scammers.
"A law firm called Skadden were appointed by some of the Finablr board to investigate potential claims."
If they are appointed by the board, you can expect they will do whatever the board wants....They pay their bills.