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Chrysalis VCT: liquidation

Sophisticated and complex high-risk tax-sensitive investments in small companies: handle with care
BusyBumbleBee
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Re: Chrysalis VCT: liquidation

#414345

Postby BusyBumbleBee » May 23rd, 2021, 10:55 am

Good morning, pscamble.

I see this is your very first post on the Lemonfool and really good to see it was on this board. So, a warm welcome. You will find some very knowledgeable Fools here.

You have raised an important topic - I too have been wondering what the heck they are up to - we could reasonably have expected some cash back by now - after all while we are waiting we are missing opportunities to reinvest the cash. We have already missed one dividend :cry:

Not sure I fully understand your words and so have interpreted them as meaning 'They need a bomb up their backsides' - it that about right?

wilwak9
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Re: Chrysalis VCT: liquidation

#414417

Postby wilwak9 » May 23rd, 2021, 3:15 pm

It’s far too quiet. Not even a single update regarding the liquidation.

It’s now about 7 months in to the liquidation process. Surely issuing some sort of statement isn’t beyond them.

I still have a quite a sizeable holding in Chrysalis and it worries me.

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Re: Chrysalis VCT: liquidation

#414521

Postby Kidman » May 24th, 2021, 9:34 am

Looking at Companies House filings I see that the liquidator was appointed on 26 November 2020 but that wasn't filed until 03 February 2021 and the passing of the resolution to wind up wasn't filed until 05 May 2021.

Much as I would like some cash back I suspect they are hoping to progress one or more exits before returning the first tranche of money. The fewer distributions, the lower the costs. On the other hand we know that some of the former directors and managers are being paid as advisers for three years and it is not in their interests to end the liquidation too fast.

The only way to know more would be to call Messrs Batty and Jesseman, the liquidators, whose number is stated as 020 7831 1234.

UncleEbenezer
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Re: Chrysalis VCT: liquidation

#414524

Postby UncleEbenezer » May 24th, 2021, 9:40 am

I expect we may soon be having the same discussion about Ventus. So anyone who's not happy waiting might want to sell those while they still can!

wilwak9
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Re: Chrysalis VCT: liquidation

#414536

Postby wilwak9 » May 24th, 2021, 10:15 am

Kidman..... I totally agree that small returns of capital aren’t cost effective.

I’m not so much chasing cash..... I’d just like to receive an update. Even if it says there’s been no progress then at least we know that shareholders haven’t been forgotten.

UncleE....... I exited Ventus a while ago. The income returns going forward seemed poor and dividends uncovered. The statement from the board confirms my thoughts........ however the value of the assets has surprised me! Good news for shareholders.

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Re: Chrysalis VCT: liquidation

#414644

Postby UncleEbenezer » May 24th, 2021, 2:58 pm

wilwak9 wrote:UncleE....... I exited Ventus a while ago. The income returns going forward seemed poor and dividends uncovered. The statement from the board confirms my thoughts........ however the value of the assets has surprised me! Good news for shareholders.

Yes, it sounds like a very satisfying conclusion to the Ventus story. One might say too good to be true, but it's not as if they're trying to sell us anything!

I'm wondering if the asset value discrepancy might have a bearing on the premia in the wider Renewable Infrastructure sector? A similar discrepancy in those could imply asset market values well above published NAV, which would make those premia an illusion.

wilwak9
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Re: Chrysalis VCT: liquidation

#414671

Postby wilwak9 » May 24th, 2021, 4:27 pm

UncleEbenezer wrote:
wilwak9 wrote:UncleE....... I exited Ventus a while ago. The income returns going forward seemed poor and dividends uncovered. The statement from the board confirms my thoughts........ however the value of the assets has surprised me! Good news for shareholders.

Yes, it sounds like a very satisfying conclusion to the Ventus story. One might say too good to be true, but it's not as if they're trying to sell us anything!

I'm wondering if the asset value discrepancy might have a bearing on the premia in the wider Renewable Infrastructure sector? A similar discrepancy in those could imply asset market values well above published NAV, which would make those premia an illusion.


I did fine out of Ventus. With the up front tax relief and steady dividend stream it was a steady performance..... but current shareholders are going to get a nice bonus it seems.... so long as buyers can be found!

I have a holding in KKVL who seem to have resoundingly proved that investment returns in AD Renewable Energy are not guaranteed!

BusyBumbleBee
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Re: Chrysalis VCT: liquidation

#414752

Postby BusyBumbleBee » May 24th, 2021, 8:19 pm

wilwak9 wrote:I have a holding in KKVL who seem to have resoundingly proved that investment returns in AD Renewable Energy are not guaranteed!

So do I and undoubtedly AD is difficult but JLEN and AAVC have made a success of it - a roaring success actually. The fact that KKVL have messed it up is their incompetence. In fact they may never be able to sell those assets cos JLEN may have already bought the only one that worked.

wilwak9
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Re: Chrysalis VCT: liquidation

#414761

Postby wilwak9 » May 24th, 2021, 8:41 pm

BusyBumbleBee wrote:
wilwak9 wrote:I have a holding in KKVL who seem to have resoundingly proved that investment returns in AD Renewable Energy are not guaranteed!

So do I and undoubtedly AD is difficult but JLEN and AAVC have made a success of it - a roaring success actually. The fact that KKVL have messed it up is their incompetence. In fact they may never be able to sell those assets cos JLEN may have already bought the only one that worked.


I think ‘incompetence’ is the perfect word to describe the management of KKV.

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Re: Chrysalis VCT: liquidation

#414808

Postby Kidman » May 24th, 2021, 10:28 pm

wilwak9 wrote:I’d just like to receive an update.
I agree but I believe that if there are no distributions made then the earliest we will hear anything will be after the anniversary of the start of liquidation when we should get an annual report from the liquidators about progress and costs thus far. I would expect that around first quarter 2022.

wilwak9
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Re: Chrysalis VCT: liquidation

#414856

Postby wilwak9 » May 25th, 2021, 7:21 am

Kidman wrote:
wilwak9 wrote:I’d just like to receive an update.
I agree but I believe that if there are no distributions made then the earliest we will hear anything will be after the anniversary of the start of liquidation when we should get an annual report from the liquidators about progress and costs thus far. I would expect that around first quarter 2022.


Oh ok. Fair enough. Thanks for that.

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Re: Chrysalis VCT: liquidation

#414917

Postby BusyBumbleBee » May 25th, 2021, 10:27 am

wilwak9 wrote:Oh ok. Fair enough. Thanks for that.

Well I don't think that another 9 months is 'fair enough'. For either Chrysalis or Ventus for that matter.

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Re: Chrysalis VCT: liquidation

#414976

Postby yorkshirelad1 » May 25th, 2021, 12:58 pm

Kidman wrote:Looking at Companies House filings I see that the liquidator was appointed on 26 November 2020 but that wasn't filed until 03 February 2021 and the passing of the resolution to wind up wasn't filed until 05 May 2021.
(snip)

Thanks for the nudge, it wasn't an angle I had thought of. I went Googling. If anyone else is interested, here's the link to Companies House and Chrysalis VCT
https://find-and-update.company-information.service.gov.uk/company/04095791

wilwak9
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Re: Chrysalis VCT: liquidation

#415002

Postby wilwak9 » May 25th, 2021, 2:15 pm

Taking 5 months to get around to filing the special resolution at companies house doesn’t bode well for a speedy liquidation.

I’m nervous that there’s no feeling of urgency to get things moving or informing shareholders.

I’ve held shares in several liquidations and based on past experience would have expected some sort of shareholder communication by now.

Kidman
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Re: Chrysalis VCT: liquidation

#415073

Postby Kidman » May 25th, 2021, 4:31 pm

Just out of interest I thought I would check, via Companies House, on the timetable for solvent liquidation of a private equity investment trust that I used to have shares in, Thompson Clive Investments plc.

The wind-up resolution was in Dec 2007 and in Jan 2008 the resolution and appointment of liquidator were filed. At the same time the former directors filed a declaration of solvency.
The liquidators then filed semi-annual reports showing every cash transaction. These are not the reports sent to shareholders which are annual and somewhat more informative.
The final distribution was in Nov 2018 and the company was struck off in May 2019.
Hence the whole process took about 11 years mainly due to the assets being illiquid as in a VCT.

From memory we got about five distributions (all by cheque) and we would have had annual reports detailing progress and delays. I suspect with CYS we are all going to have to be more patient than we would like, but there are not a large number of holdings and there is some cash on the books so let's hope for a first distribution before too long.

One concern I have with such liquidations is that there must be a temptation for the liquidator (and in this case their advisors) to sell off illiquid investments as quick as they can if they can get any half-decent offer but that may not be in shareholders' longer term interests. There have been several parcels of illiquid shares doing the rounds in recent years at a wide variety of valuations.

wilwak9
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Re: Chrysalis VCT: liquidation

#415141

Postby wilwak9 » May 25th, 2021, 7:55 pm

Yes, could be long process unfortunately.

Our shares are held in a Barclays nominee so I didn’t receive any shareholder communications so before I noticed they’d already fallen in price just prior to suspension. So we’re stuck in now for the full term of the liquidation. Frustrating.

I got the impression that towards the end the directors of Chrysalis had lost interest in the company. I just hope that shareholders interest are being sufficiently looked after. We could do with some large shareholders on the board.

yorkshirelad1
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Re: Chrysalis VCT: liquidation

#415277

Postby yorkshirelad1 » May 26th, 2021, 12:19 pm

wilwak9 wrote:Yes, could be long process unfortunately.

Does anyone know if there any time limits tax-wise for shareholders on how long it takes the liquidators to dispose of the assets and make capital distributions to remaining shareholders?

I have a distant memory of a time limit of three years after liqudation for receiving capital distributions tax-free (I can't find the source yet, but am Googling hard....)
AIUI, capital distributions from a VCT are tax-free, although this allowance/status may only continue for 3 years after liquidation.
The nearest thing I can find at the moment
https://www.gov.uk/hmrc-internal-manuals/venture-capital-schemes-manual/vcm56010

There was an article (apparently written in 2014) on taxnotes.co.uk (http://taxnotes.co.uk/venture-capital-trusts-part-three-how-is-the-vct-structured/ although the site (taxnotes.co.uk) itself seems to have disappeared now but is available via the internet archive at:
https://web.archive.org/web/20190210104247/http://taxnotes.co.uk/venture-capital-trusts-part-three-how-is-the-vct-structured/ and a copy is available at: https://www.academia.edu/23863237/Venture_Capital_Trusts_Part_Three_How_is_the_VCT_structured)
which may be a bit out of date, but covers this area.

(PS: this query is about ongoing tax on capital distributions during liquidation, it is not about any inbuilt deferred CGT which may come into play on liquidation, which is a separate, but not unrelated, matter).

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Re: Chrysalis VCT: liquidation

#415343

Postby Kidman » May 26th, 2021, 4:39 pm

As I understand it, all tax reliefs for a VCT in liquidation are treated as if the company were still a VCT until either the end of the liquidation of, if earlier, the end of three years from the passing of the necessary resolution by shareholders.

Hence if the liquidation has not been completed within three years then at the three year anniversary tax reliefs no longer have effect. In the case of CYS as there have been no new shares issued for some years there is no initial tax relief to be affected but any CGT deferral from the early days will crystallise on that third anniversary.

I can see one other possible tax implication. If a holding is sold at a profit by a VCT in liquidation after the three year anniversary then there may be a company CGT liability.

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Re: Chrysalis VCT: liquidation

#418937

Postby Kidman » June 11th, 2021, 10:04 pm

On checking Companies House, I see that the Declaration of Solvency was filed 16 December 2020. I think I had missed it when looking before.

It states total surplus (with assets at estimated values) - £14,932,000
Estimated expenses of the winding-up (plus £1k interest) - £979,000
Estimated surplus for distribution to shareholders therefore - £13,953,000

The number of shares in issue is just under 28m so that gives around 50p per share.

I sent a message to the liquidator via web form asking if there was any progress they could report on but although I received an email saying a named person would respond, I have since then heard nothing.

I note that the cash in hand is hardly any more than the cost estimated for the winding-up (which include the fees of the previous directors who are acting as consultants). Hence I suspect we will not have any chance of a distribution until they have made exits worth a few million pounds.

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Re: Chrysalis VCT: liquidation

#418943

Postby wilwak9 » June 11th, 2021, 10:40 pm

Thanks Kidman

Let’s hope they can generate 50p per share over the next couple of years.

I’d take that.


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