Quote:
Originally Posted by xPeru
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.
I'm no expert, but the bolded part above seems hard to believe after looking at the numbers.
Here is Media Corp's last
annual statement.
Purple Lounge accounted for over 78% of Media Corp's total revenues for fiscal year 2011 (£27,630,000 out of £35,145,000). So they are a lot more than just some minor subsidiary.
And they were quick to highlight how well Purple Lounge was doing (29% revenue growth)... with seemingly no concern over the loss on the bottom line.
Now they are pointing to the £900k loan, which seems like a fairly minor amount of money compared to Purple Lounge's annual revenues.
In their most
recent financial statement, Purple Lounge accounted for 91% of Media Corp's revenues! Media Corp is practically a shell company at this point. In this statement, they are quick to blame Purple Lounge for their losses, although it seems clear that their other business sectors were performing much worse.
The gaming business grew their revenues by over 50% compared to the prior year.
Their next-largest business unit (advertising) saw their revenues fall by more than 50% over that same period (March 2011 - March 2012).
In a nutshell: they wanted all the benefits of the gaming business, without assuming any of the risks or liabilities associated with it.
And now, despite having a cash balance of only £0.52 million, Media Corp is buying
another gaming company (Intabet) for £1.53m million worth of stock?!
It's all pretty audacious. I don't see why the courts would allow them to keep doing this.