The GBT Repayment Plan, Fact vs Fiction

 

Today it was widely reported that Groupe Bernard Tapie could not, in the end, come to terms with the U.S. Attorneys Office nor Full Tilt Poker, in a deal that has been for months, expected to make repayment to former FTP players, while launching the “New Full Tilt Poker”.

The following statement was issued to the media today by Laurent Tapie on the subject:

Groupe Bernard Tapie regrets to announce that, after seven months of intensive work, our efforts to obtain final approval of the United States Department of Justice of the agreement to acquire the assets of Full Tilt Poker have ended without success.  

 Ultimately, the deal failed due to two major issues. 

  1. The parties could not agree on a plan for repayment of ROW players. 

GBT proposed a plan that would have resulted in immediate reinstatement of all ROW player balances, with a right to withdraw those funds over time, based on the size of the player balance and the extent of the player’s playing activity on the re-launched site.  All players would have been permitted complete withdrawal of their balances, regardless of whether they played on the site, by a date certain, and 94.9% of ROW players would have been fully repaid on day 1.  DOJ ultimately insisted on full repayment with right of withdrawal within 90 days for all players– a surprise demand made in the 11th hour, after months of good-faith negotiations by GBT.

  1. The legal complications surrounding the deal – specifically, questions surrounding the legality of the forfeiture under non-US laws – also proved unresolvable. 

All of the key assets of the FTP companies reside outside of the United States.  A non-US court well might regard the purported forfeiture as a “fraudulent transaction” and declare it invalid or deem the acquirer of the assets responsible for all of those creditor obligations.         

Given the $80 million purchase price, and the substantial amount of cash needed to relaunch FTP, those issues ultimately proved too substantial to overcome. 

GBT is very conscious of the hopes it has created – among FTP employees that they will retain their jobs, among FTP players that they will recover their balances, and among the entire poker community that the world’s finest poker platform will be relaunched and bring a needed added element of competition to a world market that today is fully dominated by a single operator.

GBT cannot accept the end of those hopes.

For that reason, unless a concrete and legally viable solution is found in the very coming days to save the employees and repay the players of FTP, we will move to our own plan of action.

We understand from press reports that the DOJ may have entered into an agreement with PokerStars pursuant to which PokerStars will acquire the FTP assets. If accurate, we can only assume that PokerStars determined that it was willing to accept these legal and financial risks in order to resolve its own legal situation with DOJ.
If a PokerStars acquisition of FTP means that all FTP players will be fully repaid immediately, we are very happy for the players, as their final and full repayment has always been our priority.

We only regret that such a deal would signal further consolidation of a poker market already dominated by a single player – an outcome that may raise antitrust concerns and that, in the long run, is probably not good for players and for the whole online poker industry.

Let me try to make some of this clearer.  According to my sources and all the information I have seen, there have been several different business models presented by GBT as possibilities over the last couple of months.  Once it became clear that “repay or otherwise make whole” did not mean what FTP or possibly the DOJ thought that it meant, the plan morphed multiple times, in trying to make that deal happen.  What you see below is only part of what potentially may have been the repayment plan, had the deal been completed.

ROW evolving repayment plan via GBT purchase:

Early plans:

Players with an account balance of less than $ 100 could be repaid in full or have that balance credited to their players account in the new company, virtually immediately.  According to some sources, this was believed to encompass ~95% of account holders, and is what the media release today in fact, labeled as 94.9% of ROW players.  What was left out of that release was that that purported 94.9% of player balances amounted to approximately $ 16,000,000.00.

The remaining 5.1% of players, with an approximate aggregate account balance of $ 168,000,000.00 fell into a different group.

Each player with a balance less than $ 500.00 fell into the “standard players” category.

Each player with a balance of more than $  500.00 but less than $ 10,000 fell into the “silver players” category.

Each player with a balance of over $ 10,000.00 fell into the “gold players” category. 1

In each of these categories, in order for players to move more than the original $ 100 over to the unrestricted column (available for withdrawal), there would be significant playthrough requirements. The requirements appear to be staggered based on the balances but it is clear that the initial value of the new player account balance on which to play with, if one decided to play, is only a small percentage of the old account balance, based on the activity of the account in 2011. For the players used to playing mid-high stakes, they would need to make a fresh deposit in order to play in limits they were used to. After generating some substantial amount of rake, some more funds would be moved to the unrestricted column. It was expected that in many cases, this would take years to complete if only minimal(relative) deposits/playthrough was accomplished.

If players for some reason, did not partake in reactivating their playthrough, after a period of 6 months, their old FTP account balance would be hit with inactivity penalties. The planned penalty was 5% of the inactive balance per month and would continue until either the player became active in the new company or until their balance was depleted by the penalty charges. If a player had been charged some monthly inactivity fee then became active, the penalties charged would not be reinstated, they would start only with their already depleted balance. Although there was some promise that withdrawals should be approved and completed within originally a two year then a three year period, based on the above requirements and inactivity penalties, many players old account balances would already be depleted in less than the three year period.

Even for players that had 4,5, 6 or 7 figure balances, $ 100 of their balance would be available for unrestricted withdrawal or credit into their new account balance for play on the new site.

Players that requested withdrawal of their $ 100 would likely see that withdrawal take place within 30 days of relaunch.

Returning players would have been required to accept the above scenario in order to be considered for any repayment of old balances.

Newer plans:

The above repayment scenario, found to be unacceptable by FTP and reportedly by DOJ as well, being unfair to players of FTP1, morphed several times more over the weeks leading up to the demise of the deal.

One change: GBT added some criteria that ROW players would be required to apply to US DOJ for remission before GBT ever became directly responsible for any balance over $100. GBT would then have made some agreement with DOJ to repay DOJ for payments that DOJ made to any qualified ROW player that were paid from the remission fund.  Details on those repayments to DOJ are unclear except that GBT had incorporated some limit of responsibility, falling less than the full account balance, and possibly limited only to the amount of funds actually deposited by the players in question (net deposits), not their winnings or other additional value of account balances. If players refused to apply to US DOJ in this scenario, the new company assumed no further obligation for their balances.

When that scenario also was not approved, lastly, , GBT changed their plan again to no longer require returning players to apply to US DOJ for remission payments, although that was an option. The other option was for ROW players to not apply for remission (still not knowing how much that remission would have paid them), but to opt for a repayment plan solely through the new company. The only thing the new company would promise is that they would “repay or otherwise make whole, at their discretion” without limit, penalties or restrictions, the old balance, within a five year period. They could either reinstate the old balances under this plan or offer to exchange that balance for incentives or options as long as those other options were equal to repayment in full or its fair market value. ROW players would have had to agree to this scenario. There is some evidence that it was expected that most of the “standard” and “gold” players (less than $ 10,000 balances) , had they opted to play on the new site, would likely have been paid within 18 months. In later business models, the idea of inactivity penalties, was removed, then added back, then removed again. It is still unclear as to what the final model would have allowed in that regard.

Additional information not widely known is that although GBT had originally agreed to pay $ 80 million to the DOJ for those assets, they had also asked for a payment plan to do so, paying out only $60 million up front and the balance to follow in an agreed upon plan. Furthermore, GBT had recently made an agreement with one investor who would have invested $ 25 million for the new company. This investor’s identity, (an entity not an individual), is known to this author, and is recognizable in the industry, but since it is unclear whether they were aware of all the particulars of the business plan, shall remain unnamed at this time. What that investor may not have known, is that Tapie has been courting an additional investor, and had they come to terms with investor #2, investor #1 would have been history. (For clarity, neither of these investors are affiliated with the new buyer expected to complete a deal shortly with FTP and DOJ).

Details regarding the licensing plans, professional players considered as representatives, and additional surprising actions, taken by what was once thought to be the “white knight”, will be forthcoming in the next few days.

Footnotes

  1. There is at least one document that suggests these categories, “standard”,”gold” and “silver” are based on revenue generated during 2011,and not player balances, same values.  The categorization of the 3 classes, however, with respect to the different classes of available funds becoming “unrestricted”, remains the same.
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20 Responses to The GBT Repayment Plan, Fact vs Fiction

  1. hasu says:

    Interesting read, looks like we can be happy that the GBT deal didn’t go through.
    What sources do you have for the details of this repayment plan?

  2. Kevin says:

    So it seems that the bulk of player balances would have been turned into what essentially would have been “bonuses”…that they would have had to play for in order to “earn”….money that was originally there’s to begin with.

    Yeah…that arrangement would have “totally” reinforced my perception that the new FTP was a viable company. (*sarcasm*)

    Although it does answer the question as to how they were going to try to avoid a “run” on withdrawls within the days following any hypothetical opening.

  3. MicroRoller says:

    What a joke. Sad that this is what so many people have had their hopes pinned to this past year.

    Although the GBT deal might have served another purpose.

  4. dway says:

    It didn’t look ideal but this would have been alot better than getting nothing back. You can’t expect someone 1/4 billion or whatever and it just evaporates and they are left with an empty site. Elements of the deal look a bit shady though.
    Clearing your old balance as a bonus might not be too much fun if you won an MTT or something.

    • Kevin says:

      “Clearing your old balance as a bonus might not be too much fun if you won an MTT or something.”

      My point exactly. A micro/mid stakes grinder who satellited into one of the old $216 mtt’s, and then luck boxed their way to the final 20 or so in the week before the closure, would have a hell of a time trying to earn that money back.

      Outside of the horrible accounting mess that Bitar let happen, alot of the money may or may not still exist in all the crazy disbursements that were given to shareholders right up to the end of the company. This is who I’d like to see the DOJ and others go forcefully after. Why should players have to wait/hope/wish for a new buyer to take over when a select few people are still sitting on millions of dollars that is all a part of this debacle.

  5. hansolo_bp says:

    Hi DF, thanks for keeping up the good work :) ! Do you have any info on the supposed take over of FTP through stars?

  6. Jeremy says:

    These guys wanted FTP for nothing, like a guy at a yard sale trying to get a set of golf clubs for a buck. Motherf*****s never had enough cash, and jerked us along for 7 months. Good riddance.

  7. Vincent says:

    I don’t want to be pessimistic, but I don’t think many investors would fancy launching a new company with $190m+ in the liability column of the balance sheet from day 1.

  8. total bs says:

    What a load of bs had my hopes so high then dashed then back again… I heard about this bonus thing and how they were trying to snake out and pay as little as possible. Legitimate money that I work hard is suddenly and publicly stolen from me and there’s nothing I can do about it? How the f was this allowed to happen?? Thank goodness that scammer GBT didn’t take over the site because with conditions like these I would have been so choked. Hope this stars deal goes through and I get my 20K. one time!

  9. Robert Dudek says:

    Hi DF,

    Was there any indication on how FTP points and medals would have been handled?

    • Diamond Flush says:

      I am pretty sure that points and tourney tickets would have been credited as they had been when the site went down, i.e. in the same form, not cash, for ROW players. I do not know how the DOJ would have handled those via the remission process. Tbh, I do not remember about the medals, I would have to check my notes.

  10. Jerseys says:

    Your articles need cliffs.

    • Diamond Flush says:

      Cliffs: “If you are a ROW player with $$ at stake, you just hit the greatest one outer of all time”. How’s that?

  11. flight2q says:

    LOL at “sabotage”. So GBT tried to get FTP for 20 mil down and promises of more to various parties if could turn a profit. Don’t blame them for trying; they didn’t fail due to being cheap. They failed by not understanding the DOJ’s priorities. DOJ needs cooperation of foreign governments in this and other affairs. They don’t need some yahoo coming in with a deal that leaves ROW players with high risk of not being repaid, and with thousands complaining about the process even if it works out.

  12. jimsbets says:

    DF any new info on stars buying FTP in the last couple days? (since 2p2 went down)

  13. kevin says:

    Fact: You didn’t outline how quickly players (the rate of which) wouldve been able to clear their balances for withdrawal.

    Fact: Tapie writes that players with big balances wouldve been repayed by 18 months. How do you (how does he?) reconcile this if players have to play to allow their balances to be withdrawn?

    Fiction: We can objectively evaluate this plan

    • Diamond Flush says:

      Fact: In this article I made clear that there were multiple scenarios under which players could receive compensation via playthrough/deposits etc.
      Fact: in his defense, he did not say players with large balances would have been repaid in 18 months, in fact, big balances could have been tied up to 5 years. If you read the article, again, this is clearly spelled out.
      Fiction: You are an objective reader with no agenda.

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