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It is a wildly believed myth that shareholders own the company that they hold shares in. They don't.
Instead, they own share certificates.
These certificates give certain economic rights to the holders, but most definitely do not include ownership of the legal entity or rights to its assets.
Instead, they own share certificates.
These certificates give certain economic rights to the holders, but most definitely do not include ownership of the legal entity or rights to its assets.
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Not sure I would agree with that Angoose.
The Directors appointed by the shareholders would have signed over the assets of the shareholders to the banks as security for loans that have kept Debenhams solvent.
The Directors appointed by the shareholders would have signed over the assets of the shareholders to the banks as security for loans that have kept Debenhams solvent.
Debenhams has passed through a pre-pack administration process. This lets a company sell itself, or its assets, as a going concern, without affecting the operation of the business.
The lenders now take control of the business and will look to sell it on, while shareholders lose their investments.
Does not seem right to me?????
Business seems to be getting ever more immoral
The lenders now take control of the business and will look to sell it on, while shareholders lose their investments.
Does not seem right to me?????
Business seems to be getting ever more immoral
The present management along with the creditors ie banks have decided to put the company into administration rather than accept Mr Ashley's offer of £200m cash injection. No wonder Mr Ashley is fuming - he's lost his original £150m investment - despite prepared to invest another £200m as long as he's installed the CEO; shareholders and stock creditors would be wiped-out.
The question is how will the banks get a return of more than £200m (cash) unless of course a deal has been negotiated with a 3rd party or parties prior to administration?
I think the banks are immoral to the core not allowing shareholders a vote to choose between administration and a rescue plan by Mr Ashley as CEO; the latter (at least) has a slimmer of hope of a (small) return from original investment for small (private) shareholders. The former is a complete shareholders wiped-out (including Mr Ashley's original £150m investment) with the banks the only benefactor of a minimum return of £200m, using Mr Ashley's £200m injection as a guide.
And, no wonder Mr Ashley's feels aggrieved and pissed-off.
The question is how will the banks get a return of more than £200m (cash) unless of course a deal has been negotiated with a 3rd party or parties prior to administration?
I think the banks are immoral to the core not allowing shareholders a vote to choose between administration and a rescue plan by Mr Ashley as CEO; the latter (at least) has a slimmer of hope of a (small) return from original investment for small (private) shareholders. The former is a complete shareholders wiped-out (including Mr Ashley's original £150m investment) with the banks the only benefactor of a minimum return of £200m, using Mr Ashley's £200m injection as a guide.
And, no wonder Mr Ashley's feels aggrieved and pissed-off.
Surprised at that, I thought it had to go to the shareholders for a vote.
Couldn't give a toss at Ashley losing out though, he's fleeced his workforce all his working life.
Couldn't give a toss at Ashley losing out though, he's fleeced his workforce all his working life.
Absolutely can't help but smile that Ashley has lost 150 Million. I guess he is still an outsider and they won't let him in their club and why should we care!
The bottom line is that the shareholders employed the Directors but there does seem to be a bit of a smell. Will be interested to see how this was arranged and the legality plus the morality of it. The Directors are supposed to represent the best interest's of the shareholders not the Banks or employees. How did the banks get control?
The bottom line is that the shareholders employed the Directors but there does seem to be a bit of a smell. Will be interested to see how this was arranged and the legality plus the morality of it. The Directors are supposed to represent the best interest's of the shareholders not the Banks or employees. How did the banks get control?
Shareholders did (do) not employ anyone. Yes, they are involved in voting for the appointment of directors, but they are employed by the legal entity.
Banks / lenders gain control through the terms and conditions of their loan agreements.
Same way that your mortgage lender can take control of your home.
Banks / lenders gain control through the terms and conditions of their loan agreements.
Same way that your mortgage lender can take control of your home.
Those who loan money to a business are always in control, try breaching your covenants and you'll find that out very quickly.
It's how venture capital / private equity groups wrestle control away from the founding members of a business.
It's how venture capital / private equity groups wrestle control away from the founding members of a business.
I think the banks decided to call in their loans, and sell the business piecemeal or as a whole if a buyer could be found thinking that if Mr Ashley was prepared to pay £200m on top of his £150m original investment the business would be worth at least between £200m - £350m.
I'd not wish to be the people advising Mr Ashley buying into Debenhams without 1st doing utmost due diligent about the structure of the business, and more importantly the t and c of the loans and its financiers.
I'd not wish to be the people advising Mr Ashley buying into Debenhams without 1st doing utmost due diligent about the structure of the business, and more importantly the t and c of the loans and its financiers.
English shareholders are definitely not owners.
The Court of Appeal declared in 1948 that “shareholders are not, in the eyes of the law, part owners of the company”.
In 2003, the House of Lords reaffirmed that ruling, in unequivocal terms.
Ownership is not a simple concept. The classic account of its meaning was given 50 years ago by another legal scholar, Tony Honoré.
Ownership, like friendship, has many characteristics and if a relationship has enough of them we can describe it as ownership.
If I own an object I can use it, or not use it, sell it, rent it, give it to others, throw it away and appeal to the police if a thief misappropriates it.
And I must accept responsibility for its misuse and admit the right of my creditors to take a lien on it.
But shares give their holders no right of possession and no right of use.
If shareholders go to the company premises, they will more likely than not be turned away.
They have no more right than other customers to the services of the business they “own”.
The company’s actions are not their responsibility, and corporate assets cannot be used to satisfy their debts.
Shareholders do not have the right to manage the company in which they hold an interest, and even their right to appoint the people who do is largely theoretical.
They are entitled only to such part of the income as the directors declare as dividends, and have no right to the proceeds of the sale of corporate assets — except in the event of the liquidation of the entire company, in which case they will get what is left; not much, as a rule.
(John Kay November 10, 2015, Financial Times)
The Court of Appeal declared in 1948 that “shareholders are not, in the eyes of the law, part owners of the company”.
In 2003, the House of Lords reaffirmed that ruling, in unequivocal terms.
Ownership is not a simple concept. The classic account of its meaning was given 50 years ago by another legal scholar, Tony Honoré.
Ownership, like friendship, has many characteristics and if a relationship has enough of them we can describe it as ownership.
If I own an object I can use it, or not use it, sell it, rent it, give it to others, throw it away and appeal to the police if a thief misappropriates it.
And I must accept responsibility for its misuse and admit the right of my creditors to take a lien on it.
But shares give their holders no right of possession and no right of use.
If shareholders go to the company premises, they will more likely than not be turned away.
They have no more right than other customers to the services of the business they “own”.
The company’s actions are not their responsibility, and corporate assets cannot be used to satisfy their debts.
Shareholders do not have the right to manage the company in which they hold an interest, and even their right to appoint the people who do is largely theoretical.
They are entitled only to such part of the income as the directors declare as dividends, and have no right to the proceeds of the sale of corporate assets — except in the event of the liquidation of the entire company, in which case they will get what is left; not much, as a rule.
(John Kay November 10, 2015, Financial Times)
Shareholders (individuals and companies) are merely investors or punters of the company usually for a financial return, and not owners - the real owners are the creditors eg banks/entities who loan monies to the company to function. Similarly, the driver of a vehicle does not own the vehicle, but the person/entity who bought it or whoever loans the person money to buy it.
I am now hrateful I am not well off enough to own shares in Debenhams.
I am sure Ashley will recover, a tough gane, he know that
150 million, FFS
I am sure Ashley will recover, a tough gane, he know that
150 million, FFS
It is a wildly believed myth that shareholders own the company that they hold shares in. They don't.
Instead, they own share certificates.
These certificates give certain economic rights to the holders, but most definitely do not include ownership of the legal entity or rights to its assets.
thank you angoose, we all know now, perhaps Ashley should have known, a tough world
Instead, they own share certificates.
These certificates give certain economic rights to the holders, but most definitely do not include ownership of the legal entity or rights to its assets.
thank you angoose, we all know now, perhaps Ashley should have known, a tough world
An activist investing strategy gone badly wrong for Mr Ashley (for once). Like someone said his pot is large enough to overcome this "mistaken" investment, and strategy.
Stores in Glasgow, Edinburgh, Aberdeen, Dundee, Stirling and Perth were about right with online sales on the up. Then over the next 8 or so years they opened in questionable locations..livingston, ayr, leith, dunfermline, east kilbride, inverness etc. With the exception of Silverburn..these new stores were quite obviously mistakes..
^^
Very true. I wonder what (then) management were thinking opening more shops when online shopping was clearly in its ascendancy already.
I used to shop online with them until they screwed up a purchase badly pertaining to wrong items sent and poor customer service after. I requested 2 30" waist trousers, received 44"; bought in Sutton, and returned locally using their self-addressed sticker, scanned at one of their agents (shop), yet was asked if they were purchased from Bluewater Shopping Centre miles away. And, until the "returned" items were located no refund possible.
How ludicrous was that? The manager of their customer service department reiterated this condition when he rang me at my request. Sorry for the loyal staff with them for many years, but then management were mainly to blame, I firmly believe.
Very true. I wonder what (then) management were thinking opening more shops when online shopping was clearly in its ascendancy already.
I used to shop online with them until they screwed up a purchase badly pertaining to wrong items sent and poor customer service after. I requested 2 30" waist trousers, received 44"; bought in Sutton, and returned locally using their self-addressed sticker, scanned at one of their agents (shop), yet was asked if they were purchased from Bluewater Shopping Centre miles away. And, until the "returned" items were located no refund possible.
How ludicrous was that? The manager of their customer service department reiterated this condition when he rang me at my request. Sorry for the loyal staff with them for many years, but then management were mainly to blame, I firmly believe.
Does not refusing Ashley offer result in putting people
out of work that may still have jobs under Ashley-i ask as don't know
out of work that may still have jobs under Ashley-i ask as don't know
The lawyer’s letter makes clear Sports Direct reserves the right to apply to the courts for FTI’s “removal as administrators of [Debenhams] on the grounds that you are, inter alia, conflicted and unable (at a very minimum) to independently perform your duties of investigation”.
It said FTI had been heavily involved with Debenhams since at least 8 February having been engaged by the group’s lenders. It said FTI was conflicted because it had sold the retailer’s operating companies to those same lenders via a deal arranged prior to its administration.
It said FTI had been heavily involved with Debenhams since at least 8 February having been engaged by the group’s lenders. It said FTI was conflicted because it had sold the retailer’s operating companies to those same lenders via a deal arranged prior to its administration.
Wow, that could be construed as a conflict of interest not conducive to ordinary shareholders of Debenham; FTI negotiating a sale/selling the assets with value on behalf of banks without the knowledge and/or consent (put to a vote at an egm) of ordinary shareholders. And, FTI no doubt will earn commission based on revenue raised eg the more money raised, the more FTI will receive as commission.
It is so reminiscent during the period of the Banking Crisis where lenders of companies ie banks would send in their own "people" to forensic the business, charged exorbitant fees for the privilege, and then took control of the companies on the cheap soon after as recent court cases had revealed eg Hbos; I think Noel Edmonds is one of those still in negotiations for an agreed settlement.
It is so reminiscent during the period of the Banking Crisis where lenders of companies ie banks would send in their own "people" to forensic the business, charged exorbitant fees for the privilege, and then took control of the companies on the cheap soon after as recent court cases had revealed eg Hbos; I think Noel Edmonds is one of those still in negotiations for an agreed settlement.
The Old Boy network at its best.
Let's see what Sir Sidney Rough Diamond Ashley can do!
Let's see what Sir Sidney Rough Diamond Ashley can do!
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