Cash plus no money equal broke

All major news outlets electronic and print ran with the screaming headline that Carlos Hill’s Cash Plus is broke. The two articles I did a couple months go “Cash plus Olint equals high drama” and “FSC finish off cash plus” had their highest views yesterday even though their relevance due to time is questionable because to the turn of events up to now.

After the banks and the FSC began the death march on alternative investment clubs late last year. I had hoped that Cash Plus would straighten them selves out and get the all requisite license to operate as a legal entity. The release from Cash Plus was that by April 2008 things would have been sorted out in terms of repaying investors and getting themselves on the right side of the law. They would have transformed into a conglomerate and making their clients “shareholders” in the new entity.

My post here on New Years Day “From investment club to conglomerate” echoes the sort of euphoria that I felt after Cash Plus assured its members that by April “every little thing would be alright”. The proceeding months were marred with court battles after court battles between Cash Plus, National Commercial Bank (NCB) and the Financial Services Commission (FSC).

For me personally I have not been paying much attention to all this over the past months. I know the people who have a pittance or their life in this company probably can not say the same.

Alarm bells went off when I heard the word “receivership”. I am no business guru but I know that receivership goes hand in hand with bankruptcy, liquidation, insolvency. To be fair they all have different meanings, but one without the other is like rice with no peas for Sunday dinner. For a clearer understanding of the word Receivership I call on my good friend Wikipedia.

Administrative receivership is a procedure in common law countries whereby a creditor can enforce security against a company’s assets in an effort to obtain repayment of the secured debt. It used to be the most popular method of enforcement by secured creditors, but recent legislative reform in many jurisdictions has reduced its significance considerably in certain countries.[1]

Administrative receivership differs from simple receivership in that an administrative receiver is appointed over all of the assets and undertaking of the company. This means that an administrative receiver can normally only be appointed by the holder of a floating charge. Because of this unusual role, insolvency legislation usually grants wider powers to administrative receivers, but also controls the exercise of those powers to try and mitigate potential prejudice to unsecured creditors.

According to the gleaner website Cash Plus standings are:

$23 billion in interest payments

$16 billion Principal under management

$4 billion inter company loans

$5 billion on properties acquiring and total asset of over

$15 billion. In total assets

Do the math and you will see that total liabilities exceed assets. It is fair to state that the date on this is September 2007 and their balance sheet might be looking better or even worst.

Schedule payments has been pushed back last month. What spike the huge interests in all things Cash plus was today’s headlines “Cash Plus” broke. The investor’s worst nightmare. The revelation was made by co-interim receiver manager Kevin Bandoian.

“The dates for repayment to lenders, which were published by Carlos Hill on March 30, are no longer valid, as Hill has confirmed his inability to source the money to begin the repayments.”

They are apparently “sourcing” funds from Turks and Cacaos. One of the things Cash Plus loved to boast about is their many properties and basically having their hand in every revenue stream, from telecommunications to hospitality, food distribution and so on. Well in a time like this all those solid foundations should help play a major role is reimbursing investors. Sadly a court order has prevented Cash Plus from selling any of its subsidiaries for the next 28 days whilst this receivership period is to go on for 35 days. A tight spot indeed. This would be a great time for Carlos Hill to appear like the poor people messiah in his biblical symbolic white suit and save the day.

I know the many titans of the financial sector who took Cash Plus to task and warned investors of a potential fallout are patting themselves on the back. The panzi scheme/ patty shop mash up. In a lot of ways they were right about Cash Plus having a pyramid structure. As one of the visitors no this blog commented. “taking money from Peter to pay Paul”. A revolving scheme. The same can not be said for other investment clubs that trade on the FOREX market however.

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~ by RB on April 11, 2008.

3 Responses to “Cash plus no money equal broke”

  1. What was pointed out is that they don’t fully own all those business/properties they “bought”. It’s going to be a long time before their club members see any money from them as they try to liquidate the partial equity they have in their assets.

  2. Cash Plus has come and turn Jamaica on its HEAD!!! in a time when prices are going up and the value of the dollar is constantly being eroded, there is bound to be some amount of dislocation. It’s sad tho. What does Carlos Hill get out of all of this??? Is something wrong with his head space??

  3. Adrian, sure they can liquidate their part of the assets they own to raise money to repay investors. If they have to sell all of their properties so be it. In the balance sheet the own huge amount in “interests to members”. I think people should try to get the principal first

    Tamara, I will agree cash plus was doing alot of people a lot of good. My impression is that this is clearly a pyramid scheme and it is not sustainable. What is surprising to me is that it went of for 5 years and would have continued if it wasn’t for the powers that be who stepped in stage and stop the show.

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