By Tom Winnifrith | Tuesday 22 November 2016
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
Oh dear, oh dear, this really does look like it is game over for old mother Worthington (WRN). It had been looking to get a Creditors Voluntary Agreement aways so that the grateful taxpayer, viz The Pension Protection Fund (PPF) got to fund its gaping deficit, and a share of future profits went to other - mainly related party - creditors but 90% of profits outside litigation winnings where it was 50% - would go to shareholders. Of course 90% of ZERO is ZERO but the pretence was there. However..
The PFF opposed the CVA as a major creditor and thus the High Court yesterday issued a winding up order against the Company. Quite right! Worthington's directors and its army of deranged shareholders have repeatedly claimed that the businesses this "conglomerate" owns are worth tens if not hundreds of millions of pounds. In which case why the hell should the PFF have to pick up the tab for the pension deficit and indeed why should creditors who rank ahead of shareholders have to take cents in the imaginary dollar?
A full winding up will have two outcomes:
1. If Worthington and its deranged supporters are correct then the pension liability will be cleared, other liabilities will be settled in full and there will be enough left for a massive payout for investors.
2. The assets are not worth a row of beans, the PFF will still be on the hook, creditors won;t be getting their imaginary pence in the imaginary pound and shareholders will get nothing other than a lesson in basic principles of investing.
Naturally I'd bet you a season ticket to Banstead Athletic that the outcome is 2. And Worthington (still yet to file its accounts for the years to September 30th 2014, 2015 and 2016) knows this too. And that is why it now says it is seeking a Judicial Review of the High Court Ruling.
Put it this way, if it loses that review this is unlikely to be the last time that certain folks find themselves in a Court Room.
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