The Evil Diaries: We Cannot Afford This

3 mins. to read

Evil discusses Phosphorus Holdco, William Hill and HSBC…

Phosphorus Holdco, a subsidiary of Phosphorus Jersey Limited (controlled by BC Partners) and the holding company of Phones4U issued in September 2013 £205m in PIK Toggle notes. The purpose was to finance Phosphorus’s £200m dividend payment ultimately to BC Partners and which was paid the same week.

The recovery by the administrator of Phosphorus Holdco of this dividend distribution would only be for the benefit of Phosphorus Holdco’s creditors. Phosphorus Holdco is not a guarantor and is only a shareholder in the Phone4u estate. There are other if insignificant creditors of Phosphorus Holdco.

The first point to make is that for Phosphorus Holdco to be urged (for so I reasonably presume to have occurred) by BC Partners to borrow £200m (BC Partners controlled the board of Phosphorus) and for Phosphorus Holdco then to pay £200m by way of dividend the same week to BC Partners is very fishy. Surely, any Court will ask BC Partners to explain themselves. It’ll be difficult.

As regards the notion of a collusion by the P4U suppliers to collapse the P4U business, collusion may have occurred. But I suspect that collusion would be hard to prove – unless of course the exchange of documents revealed a trail of incriminating emails (be it here noted that the email system covering P4U also included Phosphorus Holdco). This would be a case brought by the administrator of P4U against the suppliers. Even if this action gets somewhere, there is still no prospect of a recovery thus arising for Phosphorus Holdco bondholders. Phosphorus Holdco has no money to commence litigation against BC Partners but I incline to think that a review of documents emerging on the P4U litigation might give cast-iron support to the view that BC Partners behaved improperly.

However, BC Partners’ behaviour is consistent with their reckoning that they had heard rumblings of imminent difficulties for P4U. If so, it is likely that there is a trail of emails within BC Partners which confirm that guess re BC Partners. All of which would make it much harder for BC Partners to claim that they behaved reasonably in stripping out a dividend.

If the Court were to order BC Partners to refund the dividend it is very probably going to be only in part. Even so, £40m or so would be very handy.

As before, a reader’s broker would have to approach Guy Butler Limited.


I am not expert on online betting but William Hill’s (WMH) being compelled to walk away from its 200p a share bid for 888 (888) since one of 888’s shareholders thinks a much higher price is in point has seen 888’s price retire to 143p this morning. That strikes me as too low.


Apparently, HSBC (HSBA) has closed the accounts of all its customers who purport to be bookmakers. This can only be a decision taken on the basis of an opinion of bookmaking in practice. But what can this basis be? An individual bookmaker might bank cheques which are not originated by customers (for instance, a limited company) but it is not and cannot be the duty of HSBC to know whether a constructive trust has been established in favour of the beneficial payer of such funds. It could of course be the duty of the bookmaker (this is long established under English law). However, there is no chance of HSBC facing a loss through being compelled to refund such funds. So, something odd is going on and it is consistent with the many lunacies that emerge quite frequently nowadays in the conduct of banks. And I posit that this is in turn caused by the mad regulators who dream up all this trouble. As a society, we cannot afford this.

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