Page 67 of Fire and Bones

“The parent company is protected from losses accrued by its subsidiaries.”

“So, if a subsidiary goes bankrupt, creditors can’t go after the holding company.”

“Exactly,” Doyle said. “I think there can also be tax benefits.”

“Is there a disadvantage?”

“For investors and creditors, yes. It may be difficult for them to know the actual financial health of the holding company.”

“Let me guess. Unethical directors could hide losses by moving debt among the various entities.”

I dredged that from a barely absorbed conversation with Ryan about a client who’d suspected just such a scenario.

“Damn. You’re good at this.”

“Hardly.” Not false humility. Finance interests me about as much as the taxonomy of molds.

“Don’t sell yourself short, girl.”

Girl?

I thought a moment.

“Can a holding company also be a way to protect the identities of the subsidiary businesses?”

“Absolutely.”

“What does this have to do with the Foggy Bottom fire?”

“Right.” Doyle again checked her notes. “W-C Commerce dates to 1941, a year before Unique Swallow sold the Foggy Bottom house to it. W-C was established as a personal holding company wh—”

“A personal holding company?”

“Meaning that fifty percent of the ownership stake is controlled by five or fewer individuals…” squinting at the scribbles “… and that at least sixty percent of its income derives from passive sources.”

“Passive sources?”

I was beginning to sound like a parrot.

“Income from sources like financial investments, stocks, mutual funds—”

“Rental properties?”

“Yes.”

“How many entities make up W-C?”

“Three or four.”

“Not exactly Berkshire Hathaway.”

“No.”

“What does this have to do with the fire?” I asked with some giddy-up in my voice. I feared a brain bleed if this discussion continued much longer.

“Right. Have you ever heard of the Foggy Bottom Gang?”

Again, I shook my head no.