Stories
On May 29, directors of Symantec Holdings Ltd decided to wind up the company, documents filed this week show. A fresh case of insolvency caused by the Covid-19 pandemic? Far from it. The declaration of solvency accompanying the voluntary liquidation papers revealed that Symantec Holdings Ltd had $8.3 billion in assets on its balance sheet. This mountain of wealth was barely dented by a grand total of $46,000 in liabilities.
The reason behind the company’s liquidation is to be found elsewhere, in the continuing massive onshoring of assets to Ireland by technology multinationals.
Symantec Holdings Ltd was an Irish-registered, Jersey-resident company typical of the double Irish tax structure – in this case, a quadruple Irish with a Jersey sandwich. For many years following its incorporation in 2003, it was the centre of the world outside the US for Symantec, the American IT security giant recently renamed NortonLifeLock.
The company, owned by its US parent Symantec Corporation at the time, quickly grew to become the holding entity for a string of global subsidiaries. Its latest accounts to the end of March 2018 show that it owned Symantec Jersey Ltd, a company fully incorporated in the Channel Island, which in turn held direct and indirect stakes in companies in Ireland, Singapore (Symantec’s other main corporate hub, according to US filings), Mauritius, the UK and the Netherlands.
One of these subsidiaries was Symantec International Unlimited, another Irish-registered company resident in Jersey, where the standard rate of corporation tax is 0 per cent. It used to own the group’s intellectual property rights outside the US and charge royalties for their use by a cascade of further subsidiaries. These included Irish-based Symantec Ltd (since then renamed NortonLifeLock Ireland Ltd), which sold €1 billion worth of security services and software internationally – such as Norton Antivirus – out of Dublin’s Ballycoolin business park last year.
Dismantling the double Irish
As previously reported, the group has been dismantling its Jersey-resident double Irish structure since 2018 in the wake of tax reforms in Ireland and in the US. The first victim was Symantec International Unlimited, which merged and onshored $7.2 billion worth of intellectual property into Ireland. Irish subsidiaries are now controlled directly from the US, cutting out the detour via Jersey.
At the same time, Symantec Holdings Ltd – the other half-Irish, half-Jersey company now being wound up – was demoted from the top of the group’s Ireland-Jersey corporate pyramid to a subsidiary of Symantec Jersey. As a company cannot buy its own parent, the transaction took place over a few days: Symantec Corporation first registered a new company, Symantec Jersey 2 Ltd, on June 5, 2018. One week later, the US parent transferred its holding in Symantec Holdings to Symantec Jersey 2. The next day, Symantec Holdings sold its investment in Symantec Jersey to Symantec Jersey 2 for $8.6 billion, paid for by way of interest-free promissory notes.Two days later, Symantec Jersey absorbed Symantec Jersey 2.
Symantec Holdings has not filed accounts since those for the year ended March 31, 2018, but notes on post-balance sheet events give some indication of what is appearing on the balance sheet of the company now being wound up.
Prior to its June 2018 demotion, Symantec Holdings had $7 billion in assets: its stake in the cascade of subsidiaries conducting the group’s business outside the US, was valued at $5.4 billion; and $1.6 billion in receivables on an intercompany loan related to an earlier acquisition.
An $8.6 billion ownership reversal
In April 2018, it received a distribution of investments in more group companies from Symantec Corporation and immediately passed them on to its subsidiary Symantec Jersey, adding the value of these subsidiaries to its balance sheet. This explains the higher value of $8.6 billion booked when the ownership structure was reversed between Symantec Holdings and Symantec Jersey two months later.
Meanwhile, a $500 million bank debt due in March 2018 now appears to have been repaid or transferred to another group company. Give or take adjustments of around $250 million over the past two years, we arrive at the $8.3 billion in net assets left in Symantec Holdings as it now goes into liquidation.
But remember where those assets came from – an $8.6 billion promissory note issued by Symantec Jersey 2 for the purchase of Symantec Jersey during the June 2018 transaction. As these two companies subsequently merged, the funds became owed by Symantec Jersey.
The liquidation resolution specifies that Symantec Holding’s assets are to be divided between its members. The company has only one member – Symantec Jersey. This will leave the Jersey company with a debt to itself equal to the value of its own capital as its main asset.
It is likely that the next steps will see Symantec Jersey wound up too, or left dormant with no intrinsic value. Symantec’s quadruple Irish, Jersey sandwich will then be fully digested. Its intellectual property valued at over $7 billion has been onshored to Ireland. Meanwhile, equity in subsidiaries worth over $8 billion is set to be erased in a paper transaction in Jersey, which means ownership is repatriated back to the US in a streamlined, firmly Irish-based structure.
