Purple Lounge parent company Media Corporation PLC announced on 31 May that the financial position of the room revealed by a recent review requires the liquidation of the Purple Lounge companies.
The official press release reads as follows:
“Purple Lounge Trading Update
Following the acquisition of Intabet Limited, announced on 16 May 2012, Adam Fraser-Harris and Phil Jackson were appointed Interim CEO and Chairman respectively immediately following the departure of Justin Drummond (Previous Executive Chairman) and Sara Vincent (Previous MD of Purple Lounge and Interim CEO of Media Corporation). Since their appointment, Adam and Phil have been conducting a strategic and financial review of the enlarged Group.
It has become clear during the review that the financial and trading position of the Purple Lounge division is no longer tenable due to historic operational and financial failings within the business. Accordingly, it is with regret that the Board announces that it has made all of the staff within that division redundant and will be instructing lawyers to file the relevant documentation to put the relevant companies into liquidation.
The Board will specifically request that the appointed liquidators look into the financial arrangements within the Purple Lounge group of companies and to review the position as to player funds.
The Board regrets any corporate failings in the past and seeks to assure shareholders that it is exploring routes to try, in some way, to mitigate the expected player losses, though this is against a background where the Group has loaned well over £1m to the division since its acquisition in October 2009. The Board does not believe that the Group will incur any further liabilities in respect of Purple Lounge over and above the realisation of the above loan.
Notwithstanding the difficult decision it has made, the Board believes that it can put the poor trading of Purple Lounge behind it and will be working to bring the Group back to profitability, as quickly as possible.
Further announcements will be made as and when appropriate.”
As it is apparent from the release, Purple Lounge, just like Full Tilt Poker, has failed to keep players’ money on a separate account, which resulted in its loss due to the unprofitable operation of the room. Media Crop. has also been negotiating with the shareholders considering a solution to compensating players, but results are currently pending.
Media Corp. set Purple Lounge offline on 28 April, which was unable to produce any profit, share or rake despite the large loan mentioned in the release. Following the decision, LGA (the regulatory authority in Malta) immediately revoked the Purple Lounge licence.
Interesting is the fact that LGA washes its hands, saying that they cannot help in resolving problems occurred following the revoking of the licence of the room. According to LGA terms and conditions, however, the room had been obliged to keep users’ money on a separate account. This is not the first time LGA has difficulties in enforcing Maltese law.
Following the acquisition of the betting platform Intabet on 16 May, Media Corp. board was optimistic regarding the future of Purple Lounge, planning to use the room to advertise Intabet after it had been reformed and reset online. Former Intabet heads Adam Fraser-Harris and Phil Jackson, however, were only given positions in the company on that day and their review of the financial position of the firm overwrote their initial plans.
The official press release reads as follows:
“Purple Lounge Trading Update
Following the acquisition of Intabet Limited, announced on 16 May 2012, Adam Fraser-Harris and Phil Jackson were appointed Interim CEO and Chairman respectively immediately following the departure of Justin Drummond (Previous Executive Chairman) and Sara Vincent (Previous MD of Purple Lounge and Interim CEO of Media Corporation). Since their appointment, Adam and Phil have been conducting a strategic and financial review of the enlarged Group.
It has become clear during the review that the financial and trading position of the Purple Lounge division is no longer tenable due to historic operational and financial failings within the business. Accordingly, it is with regret that the Board announces that it has made all of the staff within that division redundant and will be instructing lawyers to file the relevant documentation to put the relevant companies into liquidation.
The Board will specifically request that the appointed liquidators look into the financial arrangements within the Purple Lounge group of companies and to review the position as to player funds.
The Board regrets any corporate failings in the past and seeks to assure shareholders that it is exploring routes to try, in some way, to mitigate the expected player losses, though this is against a background where the Group has loaned well over £1m to the division since its acquisition in October 2009. The Board does not believe that the Group will incur any further liabilities in respect of Purple Lounge over and above the realisation of the above loan.
Notwithstanding the difficult decision it has made, the Board believes that it can put the poor trading of Purple Lounge behind it and will be working to bring the Group back to profitability, as quickly as possible.
Further announcements will be made as and when appropriate.”
As it is apparent from the release, Purple Lounge, just like Full Tilt Poker, has failed to keep players’ money on a separate account, which resulted in its loss due to the unprofitable operation of the room. Media Crop. has also been negotiating with the shareholders considering a solution to compensating players, but results are currently pending.
Media Corp. set Purple Lounge offline on 28 April, which was unable to produce any profit, share or rake despite the large loan mentioned in the release. Following the decision, LGA (the regulatory authority in Malta) immediately revoked the Purple Lounge licence.
Interesting is the fact that LGA washes its hands, saying that they cannot help in resolving problems occurred following the revoking of the licence of the room. According to LGA terms and conditions, however, the room had been obliged to keep users’ money on a separate account. This is not the first time LGA has difficulties in enforcing Maltese law.
Following the acquisition of the betting platform Intabet on 16 May, Media Corp. board was optimistic regarding the future of Purple Lounge, planning to use the room to advertise Intabet after it had been reformed and reset online. Former Intabet heads Adam Fraser-Harris and Phil Jackson, however, were only given positions in the company on that day and their review of the financial position of the firm overwrote their initial plans.
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