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Was any attempt made to raise cash from shareholders before the NAV dropped below zero? Why were constant offers by MA to inject cash into the business continually rejected in favour of creditors money? Were loan covenants unreasonably favourable to creditors and designed to deliberately to hinder any shareholder raising of funds? All good questions for our learned friends to consider, and none of which anyone not in possession of all the facts is able to answer, and that includes you daniel.f
@metemorphosid. In the event that a court awarded an amount per share to all shareholders then anyone net short at yhr moment the shares were suspended would have to pay. It's the same as when a dividend is payed.
Old news but posting it since some people appear to have forgotten it: https://uk.finance.yahoo.com/news/mike-ashley-releases-furious-statement-155200189.html
http://www.cityam.com/277325/mps-push-law-change-give-shareholders-and-business-owners/amp
..will happen because behind all the rush to pre pack and the unwillingness to take MAs money something definitely stinks. I cannot state what that is since I was not privy to what went on outside of RNS releases, however the smoke signals are there, the biggest of which being that no rights issue, never mind how diluting, was ever put before shareholders. Why was this, because the plan was imo to shut shareholders out, even if it meant breaking the rules. I believe the hope was that the existing laws around insolvency would prevent and case ever being brought, but that could all change if the Supreme Court ruling goes our way.
The publicity and precidence surrounding this could well turn any legal action into a test case of significant importance in company law. Lawyers love this sort of challenge, especially the professional acknowledgement that results from having their names written into case law.
It will be up to the court to decide who pays in the event of any finding of illegality, however if it was found that the law was broken and that the administration should have not have occurred when it did then the process will have to be unwound. Now this would obviously be prohibitively expensive and at this point the new owners of the new company would probably negotiate a settlement with the previous shareholders. IMO as a minimum this would probably equate to the offer being proposed at the time of 5p a share, though it could very well be more.
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.
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.
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.
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.
As Noel Edmonds vs HBOS showns, these things often take a very long time to resolve. MA has more legal resources to call on so hopefully a result will not take so long.
http://www.cityam.com/277325/mps-push-law-change-give-shareholders-and-business-owners/amp
When it comes to the city, the stock market is not just a part of the puzzle, it is the most essential part of the puzzle. Without it, only private companies can exist. Now the message being sent out here is that shareholders rights are worthless. MA had a 30% holding, yet he was powerless to stop a renegade board from driving the company into the hands of debt vulchures.
Other investers with big pockets will have taken note of this and will be watching with interest to see how little protection their majority holdings have, and calculating if they should start selling or put on hold any remotely risky investment strategies. Once disinvested these guys will put there money elsewhere, in safer juristictions like Germany or Singapore. They may very well leave London forever.
In summary, the FCA has no choice. As a minimum it has to start investigating soon. It needs to show these investors it will not tolerate any form of dereliction of duty by board members, and it needs to send out a loud and clear message that shareholders in the London stock market can rely upon it to uphold their rights.
Question. Is it possible to short a bond. I'm sure their must be some financial instrument that lets you do this. I also wouldn't be surprised if a few posters on here started pontificating the wonders of double digit yield paying debt with 100% gains on maturity. Come to think of it. What is the definition of junk bonds?
Very well put Jwood1. IMO if this gets to court a judge is going to see it the same way.
.. value of Debs the day it was pre packed. Was it more or less than minus the haircut that MAs offer was requiring of the bondholders?
It's called laying the ground on which to base your legal arguments. This case will take months, maybe years. Building the case, check all the relevant case law and precedents, testing evidence, all will take time. Then there's the FCA who could delay things with their own case. Given the animosity this will then probably require a lengthy trial. Of course costs will likely go to the winner, however MA might decide the risk of loosing and having to pay both sides costs does not warrant the possible gain times the chance of winning. That said, if this does go to court the press will be all over it and MA has never been shy of publicity.
. especially given the legal implications resulting from MAs stated intention to see the pre pack reversed. With regard to what I think MAs next move will be, given the complexity of the case I don't see anything happening soon, but I might be wrong.