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Old 05-31-2012, 08:51 AM   #1
Requin
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Purple Lounge to be Liquidated, Parent Company Washes Hands of Responsibility to Pay Players

For those who don't know, Purple Lounge was a division of Media Corporation, a publicly traded company. Both the Purple Lounge division and Media Corporation have been suffering large losses recently. A little over a month ago Purple Poker just suddenly shut down, with no communication with the players beyond 'updates about your account balances will be forthcoming in x days'. A number of these deadlines were missed. It should be noted that cashouts were basically stopped ('delayed') in the weeks leading up to this.

Just this morning, Media Corporation finally made a public announcement concerning Purple Lounge. It can be found here http://www.4-traders.com/MEDIA-CORPO...date-14350881/. Basically, they cite large losses and claim that the Purple Poker division lost them a lot of money, despite a 1 million euro loan they made to the division. They now claim that they are liquidating the division, and that they do not expect to be responsible for player balances:

"The Board regrets any corporate failings in the past and seeks to assure shareholders that it is exploring routes to try, in some way, to mitigate the expected player losses, though this is against a background where the Group has loaned well over £1m to the division since its acquisition in October 2009. The Board does not believe that the Group will incur any further liabilities in respect of Purple Lounge over and above the realisation of the above loan."

I don't understand how a company which has owned Purple Lounge for years can just say 'their debt isn't our debt' and not pay the players what they're owned. This is a publicly traded company, yet I haven't heard of any stock exchange regulators stepping in. The only regulator that's said anything is Malta’s Lotteries and Gaming Authority, which announced weeks AFTER the site shut down that the day before the site was closed, Purple Lounge had cancelled their license and the Gaming Authority was therefore no longer responsible for anything. This is unbelievable. If a publicly traded company's site isn't safe, I don't know what is.

Last edited by Videopro; 05-31-2012 at 10:58 AM. Reason: copied to poker headlines
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Old 05-31-2012, 09:38 AM   #2
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Re: Purple Lounge to be Liquidated, Parent Company Washes Hands of Responsibility to Pay Player

Scandalous. Particularly tilting is this line:

"Notwithstanding the difficult decision it has made, the Board believes that it can put the poor trading of Purple Lounge behind it and will be working to bring the Group back to profitability, as quickly as possible."

Will you give us our money back then?

Pokerfuse also have an article.

http://pokerfuse.com/news/law-and-re...ted-liquidate/
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Old 05-31-2012, 09:43 AM   #3
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Re: Purple Lounge to be Liquidated, Parent Company Washes Hands of Responsibility to Pay Player

They expect to just ponzi scheme the **** out of the players, then expect to not face any repercussions. civil lawsuit time
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Old 05-31-2012, 09:52 AM   #4
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Re: Purple Lounge to be Liquidated, Parent Company Washes Hands of Responsibility to Pay Player

This is so messed up!! They need to pay up!! Whatever happened to segregation of player funds??????
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Old 05-31-2012, 10:02 AM   #5
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Re: Purple Lounge to be Liquidated, Parent Company Washes Hands of Responsibility to Pay Player

This blows. Anything the players can/should do to make sure we get our money?

It's clearly fraud to not pay back the players (supposedly) segregated money so I don't see how a legitimate company can just wipe their hands of it.

Last edited by ValarMorghulis; 05-31-2012 at 10:19 AM.
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Old 05-31-2012, 10:12 AM   #6
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Re: Purple Lounge to be Liquidated, Parent Company Washes Hands of Responsibility to Pay Player

Of course the shareholders of Mediacorp and the bondholders (primarily Mediacorp) will want the bonds to be paid out first. Unfortunately they have all the leverage.

Given the requirements of their license (segregated funds), I'd say this is starting to look pretty criminal.
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Old 05-31-2012, 10:26 AM   #7
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Re: Purple Lounge to be Liquidated, Parent Company Washes Hands of Responsibility to Pay Player

I've done the research on this one and it looks bad:

1. It's not fraud to use player funds for operational expenses such as paying salaries; the segregation requirement is a regulatory issue, not a legal accounting rule in the UK.

2. The parent MediaCorp is not liable for the debts of its subsidiary Purple Lounge. The concept in law is called "piercing the veil" and it can only happen in some very rare circumstances. The fact that PL had its own employees and received money from MDC are big legal evidence against making MDC liable for the debts.

I'm doing more on this and will get out an article soon.

Legal arguments are summarised here
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Old 05-31-2012, 11:25 AM   #8
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Re: Purple Lounge to be Liquidated, Parent Company Washes Hands of Responsibility to Pay Player

How is it possible for them to have no legal liability here? They pretty much stole all players money when their regulator required them to have them segregated. Your saying this isn't criminal? Also how can parent company say they arent responsible and just go on doing business without paying?
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Old 05-31-2012, 12:51 PM   #9
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Re: Purple Lounge to be Liquidated, Parent Company Washes Hands of Responsibility to Pay Player

such a scam. any way players can help apply pressure?
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Old 05-31-2012, 12:55 PM   #10
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Re: Purple Lounge to be Liquidated, Parent Company Washes Hands of Responsibility to Pay Player

Sigh, was just pulling my money out when this happened, now 'delayed'.
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Old 05-31-2012, 01:01 PM   #11
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Re: Purple Lounge to be Liquidated, Parent Company Washes Hands of Responsibility to Pay Player

I share your anger flash:

When you deposit money on a poker site, the legal ownership of the money passes to the site. You become a creditor: the site has a contractual obligation to repay you on demand (subject to the withdrawal provisions in the site's terms and conditions).

Legally, your money just goes into a big pot containing all the funds which belong to the company, and the company has the legal right to use that money in any way it likes subject to it contractual obligations and any restrictions placed on it by the law and its memorandum and articles of association.

A company is a legal entity - think of it as being legally a person. A limited liability company is a legal entity which is liable for its own debts, The shareholders cannot be pursued by creditors unless some crime has been committed. Shareholders in BP or General Motors can't be asked to pay up for any debts that these companies run up.

Similarly, a parent company is technically just a shareholder, in this case a 100% shareholder, and it benefits from the same limited liability protections as any shareholder in any company.

There is a body of law which exists to prevent subsidiaries being created specifically to deceive or take advantage of the limited liability protection, but PL doesn't appear to satisfy any of the conditions which would make MDC liable. It had employees, it had separate directors, it's headed notepaper was completely different (yes, this is a matter that has been used in the past in court as evidence!) and it received money from MDC rather than giving money to MDC.

I think I'm right in saying that MDC will rank equally with playersas it attempts to recover its £900k loan to PL. YES!! Players will probably get less because whatever money is left will also go to MDC.

I'm still working on how big a stink we can kick up about this - I'm receptive to all ideas.
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Old 05-31-2012, 01:04 PM   #12
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Re: Purple Lounge to be Liquidated, Parent Company Washes Hands of Responsibility to Pay Player

Good thing incidents like this are far and few between in the online gaming industry.
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Old 05-31-2012, 01:08 PM   #13
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Re: Purple Lounge to be Liquidated, Parent Company Washes Hands of Responsibility to Pay Player

As long as regulators refuse to do their job, these types of things will continue to occur.
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Old 05-31-2012, 01:09 PM   #14
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Re: Purple Lounge to be Liquidated, Parent Company Washes Hands of Responsibility to Pay Player

Quote:
Originally Posted by xPeru View Post
I share your anger flash:

When you deposit money on a poker site, the legal ownership of the money passes to the site. You become a creditor: the site has a contractual obligation to repay you on demand (subject to the withdrawal provisions in the site's terms and conditions).

Legally, your money just goes into a big pot containing all the funds which belong to the company, and the company has the legal right to use that money in any way it likes subject to it contractual obligations and any restrictions placed on it by the law and its memorandum and articles of association.

A company is a legal entity - think of it as being legally a person. A limited liability company is a legal entity which is liable for its own debts, The shareholders cannot be pursued by creditors unless some crime has been committed. Shareholders in BP or General Motors can't be asked to pay up for any debts that these companies run up..
I guess I dont understand how they can break regulations of malta and their own terms and conditions on our money and not have it be fraud. What am I missing here?

Isn't it illegal for them to say they are abiding by malta jurisdiction and then do exactly opposite??

Isn't that the definition of fraud?

Malta required them to have our funds, they didn't/don't. Seems black and white to me.

I realize they aren't under malta anymore but clearly the crime took place while they were or the money would be there still.
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Old 05-31-2012, 01:10 PM   #15
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Re: Purple Lounge to be Liquidated, Parent Company Washes Hands of Responsibility to Pay Player

Quote:
Originally Posted by hamsamich View Post
Good thing incidents like this are far and few between in the online gaming industry.
Full Tilt, Ultimate Bet/AP, Beted, Everleaf all in the last ~year.

A few affiliates too.
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Old 05-31-2012, 01:36 PM   #16
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Re: Purple Lounge to be Liquidated, Parent Company Washes Hands of Responsibility to Pay Player

Quote:
Originally Posted by ChicagoRy View Post
Full Tilt, Ultimate Bet/AP, Beted, Everleaf all in the last ~year.

A few affiliates too.
Level complete.
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Old 05-31-2012, 01:37 PM   #17
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Re: Purple Lounge to be Liquidated, Parent Company Washes Hands of Responsibility to Pay Player

Truly awful situation, though thanks to xPeru for the indepth and high level of reporting.

It appears they will be no way for players to receive any meaningful sum of money back, I fear bankrolls will have to be written off. This makes my head assplode when I think of how awful us players have been treated by so many sites over the past 15 months.

In terms of:

Quote:
I'm still working on how big a stink we can kick up about this - I'm receptive to all ideas.
I'd imagine we can pursue either Fraudulent Trading:

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

or Wrongful Trading:

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

Looking at the meaning of Fraud:

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

Quote:
In criminal law, a fraud is an intentional deception made for personal gain or to damage another individual
The directors presumably still received salary and bonuses during the period which they would have known they were breaking the Malta/LGA rules.

They effectively deceived us by telling us our money was segrated, when instead it was being used to pay salaries.

Whilst this is clearly LGA's fault for not performing regular audits to check this, it is also presumably deceptive of the PL directors to continue to portray to players that they are segrating funds, when they know they are not.

If the Directors can be convicted of fraudulent trading then:

Quote:
a court order in relation to fraudulent trading it is the responsible parties (usually the directors) who must make up the loss and the third party beneficiaries will usually retain the benefit.
In terms of wrongful trading:

Quote:
The normal approach to wrongful trading actions is that the liquidator will try to establish a date at which the company can be shown to be balance sheet insolvent, and then show why it was unreasonable for directors to continue to trade after this.

In the UK, and contrary to many misconceptions, it is not an offence to trade a company while it is insolvent. Indeed in some situations, if the directors genuinely believe that the position will be turned around and the position of creditors will improve, it is the correct thing to do. When it becomes wrongful trading is when it should have been realised that the position of the creditors would likely deteriorate from that position onwards and the company would proceed into liquidation.
I think the PL Directors could claim they assumed the parent company would continue to invest further money, making a conviction under wrongful trading not possible. However, I don't think this would affect fraudulent trading - they deceived players by representing they had segregated the funds by showing the LGA logo when they knew full well they were not.

Just my thoughts!

john
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Old 05-31-2012, 01:56 PM   #18
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Re: Purple Lounge to be Liquidated, Parent Company Washes Hands of Responsibility to Pay Player

****

let me know if theres anything I can do
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Old 05-31-2012, 02:23 PM   #19
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Re: Purple Lounge to be Liquidated, Parent Company Washes Hands of Responsibility to Pay Player

Wasnt it PL who switched from microgaming too entraction just a few months ago?
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Old 05-31-2012, 02:24 PM   #20
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Re: Purple Lounge to be Liquidated, Parent Company Washes Hands of Responsibility to Pay Player

The previous pokerfuse article was a really good read a few days ago.

http://pokerfuse.com/features/commen...mands-answers/

Quote:
Last year, recently-ejected Justin Drummondís pay rose from £183k to £215k while the share price halved and the company lost millions. This stellar performance also secured him a £52k bonus.
Media Corp is also the company that bought gambling.com for $20 million and sold it for $2.5 million 6 years later.

http://techcrunch.com/2011/04/28/med...r-2-5-million/
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Old 05-31-2012, 02:29 PM   #21
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Re: Purple Lounge to be Liquidated, Parent Company Washes Hands of Responsibility to Pay Player

I have PL account but not much money.

Is this a situation where purple lounge is going bankrupt? In which case is media corp simply a shareholder and cannot be held liable, and might even get paid off first if they have preferred stock?
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Old 05-31-2012, 02:36 PM   #22
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Re: Purple Lounge to be Liquidated, Parent Company Washes Hands of Responsibility to Pay Player

was this on mircogaming?
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Old 05-31-2012, 02:51 PM   #23
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Re: Purple Lounge to be Liquidated, Parent Company Washes Hands of Responsibility to Pay Player

Quote:
Originally Posted by FishFishFish View Post
Wasnt it PL who switched from microgaming too entraction just a few months ago?
The poker side moved from Microgaming to Entraction a few months ago, yes. The casino-side remained Microgaming though.
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Old 05-31-2012, 03:00 PM   #24
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Re: Purple Lounge to be Liquidated, Parent Company Washes Hands of Responsibility to Pay Player

the company was builded for that eventuality from day one it seems.

0% risk for the banksters past their initial investment.
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Old 05-31-2012, 03:17 PM   #25
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Re: Purple Lounge to be Liquidated, Parent Company Washes Hands of Responsibility to Pay Player

What is the point of poker licensing at this point? Nobody gives a **** what their licensees do.
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