Black Friday and the aftermath: Online Poker Implications

[outragous76]

I am interested in your view that you think that would never be possible given their business model Guy.  How do you see this panning out then??   Surely pretty much as soon as they reopened there would be such a run on funds that they would then, immediately, be forced into administration??  or do you think they have, or will be able to raise, the funds to be able to trade?

Please dont get me wrong, I speak of business model being  - they hold peoples money, they slowly take it off them in rake and hold the reaminder in trust. Clearly this hasnt happened

In terms of the business now which has admitted it doesnt have funds to cover deposits, has a diminishing player base, and there will be a run on the bank should people ever get the opportunity -FTP will never trade again as it stands. It needs a shiny "under new management" sign (and a picture of Tony G)

[doubleup]

You only enter administration when you cannot trade, or believe that is imminent. FTP are not saying that is the case, nor admitting it.

Given their business model, you would imagine it could never happen ....... Unless they have spent everyones money ........ And then you would imagine that they wouldn't be inclined to admit that either! Infact they would want to hide it for as long as possible

http://en.wikipedia.org/wiki/Trading_while_insolvent

[Jon MW]

I'm no expert on these things but when a company is in the sort of situation that FTP is in then the correct thing for them to would surely be to put themselves into liquidation so that an appropriate payment could be made to all creditors from the remaining monies available.  That would not, in all likliehood, be 100% of the money owed to Todd Brunson and this payment can only be to the detriment of the payouts others will receive and as such is unjust and morally wrong and, if it isn't illegal, it is certainly on the margins of legality.

You go into liquidation when you're about to go under - you go in to administration when you could be put into bankruptcy over debts, but you still have a viable business.

It's not hugely clear where FTP would stand on this because (as far as I know) they have no single creditor who they owe enough to who could force them into bankruptcy - but their liabilities are higher than their assets.

Unless and until a company is put into administration the company can pay off whichever creditors it likes in whichever order it wants to, so if Lederer was paying Brunson back out of company funds - then he's done nothing wrong as long as he's administratively got the authority to use company funds like that.

If it's from his personal bankroll - and in return Brunson writes off the debt to FTP - then it's a non-issue.

It just struck me as a trifle ott to suggest Lederer deserves jail time for sorting out one single account. Worst case scenario (for Lederer) is that the $150k is company money and he doesn't have the authority to settle an account like that - even if that's the case, it's really not that serious.

[TightEnd]

http://www.thepokerfarm.com/general-poker-news/howards-day-out/

[TightEnd]

Harry D (who is a shareholder in blonde) posted this on THM earlier

I hope he won't mind me reproducing this here, as it goes to the nub of his anger yesterday

"Sent this to The Alderney gambling Commission earlier today:

sent to: christie.crawford@agcc.gg


Dear Sirs

Further to yesterdays hearing in London

Could you pleae answer me the following question with regard to the 250k licence fee that Full Tilt Poker have promised to pay you in the next seven days?

If there is a shortfall of player funds which means Full Tilt Poker cannot pay their players and they havent generated any money from any activities for the past four weeks (nor will they do so for the forseeable future) where is the money coming from to pay their lawyers and your license fee?

It is surely going to cause an even greater shortfall in the funds needing to be paid back to the players at some future date?

As such you are facillitating the theft of further funds from player accounts and are actively taking the proceeds of a crime but I await your answer which will hopefully reassure me.

Can you give an assurance that should players lose money from their accounts at Full Tilt Poker that you will return this money to future administrators to lessen the shortfall in those player account funds?


...and their reply

Dear Mr. xxxxxxxxxx,

Thank you for your email. Unfortunately, Alderney Gambling Control Commission is unable to comment further at this time. Please note that further details will be published on our website when they are available.


Kind regards,

Alderney Gambling Control Commission

Not surprising really

Anyway I reckon if any player loses anything they would have a solid legal claim against Alderney for contributing to the player fund deficit by taking the licence fee from a company that they know has insufficient funds to cover player deposits and theerfore are exacerbating the shortfall and even actively facilitating a criminal act - namely the further theft or misappropriation of player funds.

I have plans for The Alderney Gambling Commission and it will be fun taking them on as I have nothing better to do with my time and this should prove to be a fun project for me.Wink

Watch this space........."

the relevant thread on THM is at http://www.thehendonmob.com/forum/viewtopic.php?t=40626 (bypassing the links rules for the sake of this point)

[Bongo]

Not that I'm cynical or anything but it looks to me like the AGCC never gave a toss about player funds.

[boldie]

I'm no lawyer but how would anyone have "a solid legal claim against the AGC" simply because AGC take a license fee payment?

[Sheriff Fatman]

I'm no expert on these things but when a company is in the sort of situation that FTP is in then the correct thing for them to would surely be to put themselves into liquidation so that an appropriate payment could be made to all creditors from the remaining monies available.  That would not, in all likliehood, be 100% of the money owed to Todd Brunson and this payment can only be to the detriment of the payouts others will receive and as such is unjust and morally wrong and, if it isn't illegal, it is certainly on the margins of legality.

These are known as preference payments and are, to all intents and purposes, illegal.

In the UK, if a liquidator (NB: not an administrator or a receiver - there are subtle differences) is appointed to a business, he has the ability to investigate prior payments for evidence of this and has powers for these payments to be reversed.

Obviously, we're not dealing with a UK insolvency here so the actual situation re Full Tilt depends on the jurisdiction in which it operates.

[Bongo]

Could a similar thing apply to those who withdrew their money?

[Sheriff Fatman]

I'm no expert on these things but when a company is in the sort of situation that FTP is in then the correct thing for them to would surely be to put themselves into liquidation so that an appropriate payment could be made to all creditors from the remaining monies available.  That would not, in all likliehood, be 100% of the money owed to Todd Brunson and this payment can only be to the detriment of the payouts others will receive and as such is unjust and morally wrong and, if it isn't illegal, it is certainly on the margins of legality.

You go into liquidation when you're about to go under - you go in to administration when you could be put into bankruptcy over debts, but you still have a viable business.

Not strictly true - there are subtle differences to each although it's not obvious to the average 'man in the street' so the terms tend to be used interchangably.  The terminology isn't helpful, to be fair.

There are 3 main types of corporate insolvency in the UK - receivership, administration and liquidation. NB: 'Bankruptcy' only applies to an individual, although is also often used.

A receiver (more correctly, an administrative receiver - just to confuse the terminology further!) is appointed by a fixed chargeholder over a business (usually a bank with a charge on property but can also apply to book debts in some cases).  The receiver has powers to continue to run the business as he sees fit in order to maximise returns to creditors.  However, he is answerable to, and can only physically pay funds to, the chargeholder who has appointed him.  After this time, any remaining funds (and its rare for there to be any) have to be dealt with by a liquidator (so the company would go into receivership first, and subsequently into liquidation).  However, a receiver can't act in a way to detriment other creditors in order to maximise the returns of the chargeholder who has appointed him.

A liquidator can be appointed by creditors of a company, or by the company members themselves - so it's possible for a liquidation to occur without a receivership preceding it, depending on the circumstances.  A liquidator's role, as the name suggests, is to wind up the company and convert the remaining assets into cash which is divided proportionately to creditors (i.e. 1p in the £, etc).

An administration is a court-appointed procedure, by which a prospective administrator has to provide a case for being appointed with an exit strategy.  This might be a turnaround situation, but could just as equally be a liquidation.  The basic principal is that administration offers a temporary protection from creditors whilst the company attempts to sort itself out in order to maximise the ultimate returns to creditors - it works in a similar way to Chapter 11 insolvency in the USA.  A court is the only body which can authorise an administration to begin or to end.  There is a benefit in that the legal entity can still exit administration in its original corporate form (although I suspect this actually happens very infrequently, if at all, in practice).  In receivership cases, if there is a residual business to survive it will be a different entity to the old company.

Back in the day, when I did this kind of work, the vast majority of cases I worked on were receiverships.  Administrations then began to become more popular and seem to be the norm these days.

I'll await the countless tl;dr replies!

[RioRodent]

The whole concept of Alderney having a 'Gaming Commision' just makes me lol... I've been there!

[AlunB]

Ironically it's always been viewed as the most stringent and closely regulated of all the offshore domiciles. Although I guess that's a bit like being the tallest dwarf...

[MANTIS01]

Incred work by Harry D.

We'll get that honey monster.

[TightEnd]

http://www.gamblingcontrol.org/userfiles/file/Press%20release%20FTP%20in%20camera%20and%20adjournment%20270711.pdf

[redarmi]

Some pretty amazing stuff on subject:poker website with regards to the loans made to Ivey and payments made to David Benyamine.  Wasn't sure if i could link but potentially a big part of the jigsaw.  Maybe Ivey isn't the big hero everyone thoguht he was?