Just days after spread betting company WorldSpreads announced the abrupt departure of CEO Conor Foley to “pursue other interests,” trading on its AIM-listed shares was halted after the company admitted it was “currently unable” to resolve its books due to “possible financial irregularities.” The company issued a statement stating that it had requested the suspension of trading “given the uncertainty of the outcome” of an internal investigation. This Is London claims rumors are rife that WorldSpreads is sitting on illiquid stock it can’t move and substantial client trades it’s unable to unwind, but chairman Lindsay McNeile denied these rumors in an interview with The Independent. Roger Hynes, a director at WorldSpreads’ London subsidiary, will assume the role of interim CEO.
EPIC POKER, EPIC DEBTS
In other ‘executives (possibly) behaving badly’ news, the Feb. 28 Chapter 11 bankruptcy filing of the Epic Poker League’s (EPL) parent company Federated Sports + Gaming (FS+G) has provided plenty of grist for the poker media’s mill. On Thursday, CardPlayer published a lengthy postmortem of the filing, focusing on the discrepancy between the over $5m FS+G owes its creditors and the $15k FS+G had on hand when it filed for bankruptcy protection. The two principal creditors were All In Productions (AIP) and Pinnacle Entertainment, each owed about $2m.
In June 2011, AIP agreed to sell its Heartland Poker Tour (HPT) franchise to FS+G for $2.95m, yet the bankruptcy filing shows that FS+G failed to make the first $1m payment by its Sept. 30 due date. Indeed, the entire purchase price was to have been paid by Dec. 15, but that date came and went without FS+G having made a single payment. Half of the $2m that FS+G borrowed from Pinnacle in Jan. 2012 was immediately turned over to AIP, and a new date for payment of the outstanding $1.95m owed to AIP was set for March 31. Meanwhile, FS+G’s loan from Pinnacle required it to repay the entire $2m by Feb. 29. Quite how and where FS+G expected to find $3m in less than two months appears a bit of a headscratcher, as is how quickly the other $1m of Pinnacle’s loan was devoured over that same span.
Equally headscratching, Federated Heartland Inc., the FS+G subsidiary that oversaw the HPT, filed a Motion for Emergency Use of Cash Collateral with the bankruptcy court on Feb. 28 seeking to divert HPT’s cash flow to cover FS+G’s estimated $685k expenses over the next three months — $458k of which was destined for FS+G salary/wages. That was challenged three days later by AIP’s own motion, which, among other things, wanted FS+G to put something down in writing that “explains the exorbitant salaries and wages requested,” adding that FS+G “has little cash” and “generates no receivables.”
WE’RE NOT DROWNING, WE’RE ONLY WAVING
On Friday, FS+G released a statement calling CardPlayer’s article “inaccurate” and claiming that “during the reorganization process, the top FS+G executives are not receiving any compensation and others are receiving only a small monthly stipend.” FS+G execs Jeffrey Pollack and David Goldberg later expanded on this statement to PokerNews. Goldberg said FS+G was “not disputing those things that have been filed with the court,” but denied CardPlayer‘s claim that the court had rejected any of FS+G’s motions. Goldberg said FS+G had “pulled” the original three-month budget filing to submit a new one-month plan asking for a mere $45k “for, what I would call, FS+G expenses.”
Goldberg is adamant that the EPL’s fourth and fifth live poker events have not been cancelled, although he conceded that the current financial plight means “we can’t say when or if those events will be held. It is our intention to finish out Season I. Whether or not that happens, or when that happens, remains to be seen.” Meanwhile, FS+G “will continue to submit various motions and petitions … We expect it to be a reasonably quick process overall.” Oddly enough, early EPL critic (and arch enemy of EPL commissioner Annie Duke) Daniel Negreanu is also expecting this to be a quick process, although he and Goldberg differ wildly on what the outcome will be.