BCS - BrisConnections Unit Trusts

prawn_86 · 20 February 2009

Re: Brisconnections shareholders - financial ruin

I think it is different buying them as part of a company. And your right he might be able to argue it was speculation, but it may prove to be negligence from a co directors perspective.

As an individual if you know about it, then you have no defence when the debt collectors come and bankrupt you, you cant try and sue saying you weren't aware (that may not be succesful anyway).

Bottom line, the laws are a bit different between co directors and individuals

Gazzer · 21 February 2009

Re: Brisconnections shareholders - financial ruin

prawn_86 said:
It may prove to be negligence from a co directors perspective.

It is not negligence, he has a well planned strategy. It may fail and the company will be insolvent but then the only people who can complain would be his company's shareholders.

prawn_86 · 21 February 2009

Re: Brisconnections shareholders - financial ruin

Gazzer said:
It is not negligence, he has a well planned strategy. It may fail and the company will be insolvent but then the only people who can complain would be his company's shareholders.

As far as im aware you cannot trade with the intention of becoming insolvent. This would breach the company act and make the directors liable. Directors CAN be personally liable for companies actions if they breach certain rules

shaunQ · 21 February 2009

Re: Brisconnections shareholders - financial ruin

prawn_86 said:
As far as im aware you cannot trade with the intention of becoming insolvent. This would breach the company act and make the directors liable. Directors CAN be personally liable for companies actions if they breach certain rules

But he's not. He's actively attempting to avoid insolvency. As Enzyme mentioned, the PDS explicitly states the installments can* be waived. So by calling the meeting he is taking this speculative angle, which may or may not work.

Gazzer · 21 February 2009

Re: Brisconnections shareholders - financial ruin

Exactly, it is a calculated business risk and he must have accepted that at worst the company will be insolvent and at best he stands to make a lot of money.

Sunder · 22 February 2009

Re: Brisconnections shareholders - financial ruin

Gazzer said:
Exactly, it is a calculated business risk and he must have accepted that at worst the company will be insolvent and at best he stands to make a lot of money.

On the contrary, if you continue to trade a company, when you, as a director, know, or should have known, that the company cannot meet its obligations as they stand, then as a director, you can be held personally liable.

You can say that he was "hoping" to be able to offload the shares before the installment came due, but how is that different from say, a car dealer buying another $2m of cars, "hoping" he will be able to sell the cars before the 90 day invoice came due? The director knew, or "should have known" that there was a high probability of not being able to meet obligations.

prawn_86 · 22 February 2009

Re: Brisconnections shareholders - financial ruin

Sunder said:
On the contrary, if you continue to trade a company, when you, as a director, know, or should have known, that the company cannot meet its obligations as they stand, then as a director, you can be held personally liable.

You can say that he was "hoping" to be able to offload the shares before the installment came due, but how is that different from say, a car dealer buying another $2m of cars, "hoping" he will be able to sell the cars before the 90 day invoice came due? The director knew, or "should have known" that there was a high probability of not being able to meet obligations.

That was what my limited knowledge of the laws thought. Otherwise anyone could start a co and rack up a ****eload of debt, live it up, blow it all on personal stuff, and then not be touched.

If your operating when you know you cant meet your liabilities its a breach of director policy.

So in this case he may have been unaware when he bought the first lot, but if he continued to purchase, knowing it will amass more debt, would probably amount to negligence.

shaunQ · 22 February 2009

Re: Brisconnections shareholders - financial ruin

Sunder said:
On the contrary, if you continue to trade a company, when you, as a director, know, or should have known, that the company cannot meet its obligations as they stand, then as a director, you can be held personally liable.

If he has personal liability, then surely he would have been liable anyway before the second purchase, so he would have even more incentive to try and do something.

I don't think he is trying to profit in anyway, I think he is trying to save his skin, period. If jail is an option I doubt he'll do any because of the circumstances.

Gazzer · 23 February 2009

Re: Brisconnections shareholders - financial ruin

Sunder said:
On the contrary, if you continue to trade a company, when you, as a director, know, or should have known, that the company cannot meet its obligations as they stand, then as a director, you can be held personally liable.

The company doesn't have any future obligations at the moment because it hasn't been notified by the trust that the second installment is due, which it may do on the 2nd March. The company is not insolvent.

What about BrisConnections, are they trading insolvent? They will be if they don't get the installments in, and Rowe knows there is a likelihood of a default. Should they stop works on the basis they will not be able to meet future obligations to contractors?

Enzyme · 24 February 2009

Re: Brisconnections shareholders - financial ruin

Go Nick: link

TRUE to his word, BrisConnections' biggest shareholder, Nicholas Bolton, has begun to top up his holding in the group - and he's been getting his extra units for nothing.

A substantial shareholding notice to the Australian Securities Exchange from Mr Bolton's Australian Style Investments released yesterday, said ASI had lifted its stake from 12.21 per cent, or 47.64 million units, to 13.22 per cent or 51.51 million units.

The notice said ASI had acquired six separate parcels of shares to lift its stake, with each parcel "acquired for nil consideration".

The acquisitions mean ASI, which has sought a meeting to wind-up BrisConnections, is liable for $51.5 million when the next $1 instalment is due on BrisConnections units, on April 29.

But if ASI can't pay and proves to be insolvent, the unitholders - who perhaps think they have passed their liabilities on to ASI - will probably be in for a rude shock. Their transfers will almost certainly be able to be challenged, and then essentially reversed, by a liquidator of ASI.

ASI - one of many small investors that bought into BrisConnections at rock-bottom prices apparently without realising there are two $1 instalments still due on its units - argues that a winding up would be more beneficial to unitholders than BrisConnections continuing to build its Airport Link toll road project in Brisbane.

BrisConnections, by contrast, has vowed to vigorously resist the winding-up attempt - and warned unitholders that a winding-up would still leave them legally liable for the $1 due in April and the second $1 instalment in January next year.

There are two things I don't get.

1. How can Brisconnections go around saying the liability will still exist if the company is wound up when their PDS says the liability can be extinguished, and;

2. How can a shareholder still be liable if after they've transferred their shares to ASI? If that is the case then surely the liquidator should be able to go back to the people who sold their shares to the current holders? Ultimately the a lot of the liability would end up back with Macquarie and the other institutions who sold out on October and November. That doesn't seem to make sense.

Enzyme · 24 February 2009

Re: Brisconnections shareholders - financial ruin

In related news, as predicted in this thread a couple of weeks ago the "next Brisconnections" continues to unwind.

The Multiplex Prime Property Fund (MAFCA) has now fallen to $0.002.

There is 40 cents still to pay on these shares. That is due in 2011, but could be brought forward if the value of their property portfolio falls. At the current price a $1,000 investment gives you a $200,000 liability, but that will double to $400,00 when the price bottoms at $0.001.

brty · 24 February 2009

Re: Brisconnections shareholders - financial ruin

I notice that the following...

But if ASI can't pay and proves to be insolvent, the unitholders - who perhaps think they have passed their liabilities on to ASI - will probably be in for a rude shock. Their transfers will almost certainly be able to be challenged, and then essentially reversed, by a liquidator of ASI.

...is just the legal opinion of the journalist. Not what I would call a reliable source of legal information.

I cannot think of any examples where a court has unwound a transaction between 2 willing and competent parties, just because the purchaser couldn't afford it. Plenty of examples of where the seller was going bust (sell assets to wife to escape liquidator), but not the other way round.

This is more like a debt collector purchasing someones bad debt. Just because the debt collector is unable to collect, does not mean he (or his liquidator) gets the money back from the person who sold them the debt.

I have a feeling that those in charge of the whole Brissconnect fiasco are starting to clutch at straws.

brty

Big_Daz · 24 February 2009

Re: Brisconnections shareholders - financial ruin

brty said:
I notice that the following...

...is just the legal opinion of the journalist. Not what I would call a reliable source of legal information.

I cannot think of any examples where a court has unwound a transaction between 2 willing and competent parties, just because the purchaser couldn't afford it. Plenty of examples of where the seller was going bust (sell assets to wife to escape liquidator), but not the other way round.

This is more like a debt collector purchasing someones bad debt. Just because the debt collector is unable to collect, does not mean he (or his liquidator) gets the money back from the person who sold them the debt.

I have a feeling that those in charge of the whole Brissconnect fiasco are starting to clutch at straws.

brty

True...but maybe the "nil" consideration might have something to do with it. My very limited legal knowledge is that you need some consideration in order to have a legal contract. But I am sure this guy will have that argument covered. Might be some arrangement like delisted.com has where they buy the shares off you (ie: consideration) then charge a fee like brokerage.

Enzyme · 24 February 2009

Re: Brisconnections shareholders - financial ruin

The Multiplex Prime Property Fund (MAFCA) have just hit $0.001. Buyers are getting a liability 400 times bigger than their investment. It is happening again.

Sir Osisofliver · 24 February 2009

Re: Brisconnections shareholders - financial ruin

Enzyme said:
Go Nick: link

There are two things I don't get.

1. How can Brisconnections go around saying the liability will still exist if the company is wound up when their PDS says the liability can be extinguished, and;

Enzyme - Depends upon what level of gearing is already established with the first installment. Remember the company is raising $330 Million *3, which does not equal $4.8Billion dollars. The company may already have loan arrangements to 990 million - which means that the consortium of banks that supplied the finance for the deal (if the company undergoes administration) could then requeat all monies owed to the company to meet the loan amount. Whether this is a valid argument or not in a wind up scenario is a question for a commercial lawyer.

2. How can a shareholder still be liable if after they've transferred their shares to ASI? If that is the case then surely the liquidator should be able to go back to the people who sold their shares to the current holders? Ultimately the a lot of the liability would end up back with Macquarie and the other institutions who sold out on October and November. That doesn't seem to make sense.

Beats me - I would have though a Valid off market transfer (even with a consideration of $0) would protect the shareholder from further liability. I think the reporter is talking out his bum.

Sir O

sails · 24 February 2009

Re: Brisconnections shareholders - financial ruin

I would have thought the main goal and intent for ASI would be to stay solvent. If ASI is purchasing from the other 100 or so retail holders caught unawares, they are not knowingly selling to someone insolvent or even going to be.

Perhaps ASI isn't actually buying but relying on the votes of the others to get them all out of this mess. But then I haven't read all the articles, so could be wrong.

It would appear that, unless some prevention is put in place, bcsca won't be the end of the carnage for unfunded and financially uneducated online traders. Does anyone know if Commsec have a notice before committing to purchase MAFCA online?

finnsk · 24 February 2009

Re: Brisconnections shareholders - financial ruin

sails said:
Does anyone know if Commsec have a notice before committing to purchase MAFCA online?

Had a look was not able to see anything on the buying page is concerned about this myself dont know when I am going to get court in one.

NiMaC · 24 February 2009

Re: Brisconnections shareholders - financial ruin

I just did a dummy run on commsec and nothing has changed. There are no warnings or messages. On a quick look on MAFCA company details, I could not even find a PDS or any reference to a stapled unit.I've been following this from the start and its outrageous, even bordering on criminal intent, that these types shares are placed in the standard trading section.Obviously there is a problem with them being let loose in the everyday trader section, why doesn't the ASX do something about it? They should have halted trading at 30cents or something.Is Trevor Rowe pulling strings to manipulate the market?There should be an investigation about this. This scenario is causing much stress to a lot of people who naively took a punt on a penny dreadful, as thousands of others have done. Sure, you are prepared to loose your money that you put in, but this is a trap that could take everything with a click of the mouse button, and you haven't signed anything!The Ombudsman should investigate. Once you check in, you can never leave! Welcome to the Hotel California!!!!

Sunder · 24 February 2009

Re: Brisconnections shareholders - financial ruin

brty said:
I cannot think of any examples where a court has unwound a transaction between 2 willing and competent parties, just because the purchaser couldn't afford it. Plenty of examples of where the seller was going bust (sell assets to wife to escape liquidator), but not the other way round.

I'm just speculating, but I'd say it's the catch all fraud clause - If the underwriter could argue that this is not a "normal" transaction, and was conducted to defraud someone (the underwriters), then they could have the transaction negated, then sue the people who sold to ASI for the liability.

Would be very easy to persuade the court that they were not normal transactions, since transfered for nil consideration, and Bolton has proved he knows the liability.

sails · 24 February 2009

Re: Brisconnections shareholders - financial ruin

Sunder said:
I'm just speculating, but I'd say it's the catch all fraud clause - If the underwriter could argue that this is not a "normal" transaction, and was conducted to defraud someone (the underwriters), then they could have the transaction negated, then sue the people who sold to ASI for the liability.

Would be very easy to persuade the court that they were not normal transactions, since transfered for nil consideration, and Bolton has proved he knows the liability.

Hmmm - could possibly work on the flip side that these were not normal transactions to people who were obviously never financially in a position to purchase them - especially with possibly nearly 80% of share holders caught unawares. Possibly a case of the pot calling the kettle black?

In any case - has Bolton actually bought any more shares or is he relying on the voting power of the others? Probably all speculation at this stage.

BCS - BrisConnections Unit Trusts

prawn_86

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Gazzer

prawn_86

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shaunQ

Gazzer

Sunder

prawn_86

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shaunQ

Gazzer

Enzyme

Enzyme

brty

Big_Daz

Enzyme

Sir Osisofliver

sails

finnsk

NiMaC

Sunder

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