Cleaves Securities has denied Scandinavian media reports it has been declared bankrupt over a small outstanding tax bill in Norway.
The investment bank’s chief executive, Per Olav Karlsen, told TradeWinds that the matter had been “inflated” and that the company remains entirely solvent.
He dismissed as “nonsense” reports that the Norwegian tax administration had given the company a month to pay about $500,000 or it would initiate bankruptcy proceedings.
Karlsen said Oslo’s City Court turned down a bankruptcy petition from the authority for a “minimal tax claim” on Wednesday.
“This is being settled by us,” he told TradeWinds.
The court will revisit the matter on 24 May if the bill has not been paid in the meantime, the CEO added.
Karlsen said about $200,000 had been repaid this week, and the rest would follow in the next week or two.
The CEO told the court the company had had some issues with cashflow due to late client fees, but these are now coming in.
“Cleaves Securities is an investment bank under the supervision of the Financial Services Authority of Norway. As such, and being under strict license requirements, Cleaves Securities must deliver proof of satisfactory capital adequacy ratios every quarter,” Karlsen said.
“This we have done consistently since 2014 and we have never been in violation of these ratios. This is the same now. The company is by no means insolvent.”
Silver lining
Karlsen pledged to pay the tax bill out of his own pocket if necessary.
And he said he had been fielding phone calls on the subject all day.
“The good thing to come out of this is we had four calls from people asking if we needed investment!” he added.
Karlsen also said the confusion in the reports was added to by mixing up the accounts of Cleaves Securities and Cleaves Capital, the holding company controlled by its partners.
This company has no external creditors and runs no bankruptcy risk whatsoever, he explained.
Cleaves Capital operates with minimum share capital as per Norwegian corporate law of NOK 30,000 ($2,700).
“In that respect, the book value of the equity may be argued to be lost. However, the shareholders are in a position at any time to convert their shareholder loans to equity. This has nothing to do with the financial situation in Cleaves Securities,” Karlsen added.
He said Cleaves Securities has a proven book value equity of NOK 10m.
