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June-23-2008,
BetOnSports Liquidators Holding Out on More Submissions for Compensation...By Hartley Henderson

In September of 2007, the country of Antigua appointed VantisPLC, a UK accounting firm, as the trustee in bankruptcy for BetonSports. In February of 2008 they were asked to oversee the liquidation of the insolvent company's assets. According to a statement by Vantis, when they took on the receivership, BetonSports showed almost $27 million in liabilities with approximately $16 million owed to players. Assets, however, only totalled $10 million with $8 million of that consisting of accounts receivable. Consequently, the players can not get all their funds back and the amount they receive will be determined by how much Vantis can recoup from debtors. Vantis seemed to suggest in an e-mail that severance payouts and a run on the bank by insiders of the company drained much of the assets. This is from that e-mail:

"It is important to note that the company, and the whole Betonsports group, effectively ceased trading in July 2006 (14 months prior to our instruction) as a result of a Restraining Order issued against the group in the US, which was later converted to a full injunction. Naturally this had a devastating effect on the company's financial position. Over the following months contractual severance and termination costs in respect of the company's call centres, many hundreds of staff, supplier contracts, and finance contracts only served to further increase the liabilities of the company. On 22 November 2006 the FSRC obtained an order of the High Court in Antigua effectively freezing the company's assets and preventing ongoing trading or distribution of assets."

Regardless, the company sent e-mails to all 55,000 customers on file to instruct them that some money was available to them, but almost half of those emails bounced back. To date 9,000 customers have asked for compensation, but both Vantis and the Antiguan government do not believe that is sufficient to proceed with the distribution of funds.

"It's in the hands of the Antiguan government," a Vantis account representative told me, "but [it] clearly want[s] more people to register." The company has stated that they are awaiting the go ahead from Antigua to use other methods to convince more people to submit claims, and in fact plan on advertising in U.S. media. One reason why so many people have not submitted claims seems quite evident. Vantis stated the following in an e-mail to customers:

"It is a point to note that the US authorities have taken an active interest in this case, particularly in the actions of some of the Betonsports group directors, but we are unable to comment further as legal proceedings are ongoing."

So it shouldn't be surprising that many customers are reluctant to submit claims for compensation if they are going to be on some U.S. government watch list, and if they can only expect pennies on the dollar back. The Vantis representative, however, did not agree and stated that players need not worry. "The government is interested in directors and U.S. businesses that may have dealt with BetonSports, such as Western Union. They aren't interested in players." To many U.S. customers, however, that assurance may be cold comfort. After all, the same thing was said about NETeller just prior to the feds seizing funds in transit, and in the end the feds convinced NETeller to release all personal customer information to them before agreeing to release funds back to players.

Asked what fees the company will receive for the liquidation, Vantis was surprisingly blunt. "With regard to Receiver/Liquidator fees we can advise you that the fee structure confirmed by the FSRC and the High Court in Antigua is 5% of asset recoveries and $20 per creditor claim agreed, reconciled to the Betonsports system, and paid. The 5% collection fee does not apply to funds passed to us by the FSRC. Legal fees and disbursements are charged to the Liquidation estate at cost."

Since it is not being paid an hourly rate, it is in the company's best interest to make sure players submit as many claims as possible. Vantis is making no disclosure as to how much money they honestly believe they can recuperate, but recovery rates of about 80% in these types of situations is considered reasonable. Assuming the company can get back 80% of the $8 million accounts receivable, that would bring the total payable to creditors to about $8 million. Other creditors (besides players) are able to submit claims for compensation, but the Vantis rep made it clear that all creditors are unsecured, so player accounts will have the same right to the money as businesses that are owed by BetonSports.

I asked one bettor who has a substantial balance in his account whether he plans to submit a claim given the assurances by the Vantis rep that the U.S. government wouldn't be pursuing bettors and that person actually laughed. "I believe the author of that e-mail which says I can get 50% of a Nigerian king's multi million dollar fortune more than I believe my government," the bettor asserted. "In fact, I'm not confident this crowd running the government is capable of telling the truth, especially those in the Treasury." The bettor confirmed he is owed well into four figures but says that if the Antiguan government is holding out for over 25,000 claims for compensation to proceed he'll be lucky to see 1/10th of the amount owed to him. "Do you think I'm willing to risk an IRS audit or the police showing up on my doorstep to get a dime or two back? Forget that."

Vantis is clearly anxious to start paying back creditors, but said the decision is with the Antiguan courts and only they can give the go ahead. It appears the company will start advertising in newspapers, sports magazines and possibly TV or radio in the United States to get the message across that the money is there and people only need to submit a claim to get back some of what is owed to them.

To make a claim for compensation, bettors can go to https://betonsports.vantisplc.com, put in their credit reference # (account number) and Vantis will take it from there. Unfortunately Vantis has made it quite clear that they have no way of knowing exactly how much people can expect since the final amount of funds available is still up in the air.

06-23-2008
Hartley Henderson
MajorWager.com
henderson@majorwager.com

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