3 ms·
Hang on, a leveraged buy-out caused this? So basically, someone can borrow more money than the business can ever afford to pay back, and then that business can
by chris_wot 9y ago
Hang on, a leveraged buy-out caused this? So basically, someone can borrow more money than the business can ever afford to pay back, and then that business can be taken over and go bankrupt, even though it financially has no issues?
- number6 9y agoMore like you borrow money to buy a business and use their money (and projected income) to pay back the debt you made to buy the businsess.
- vkou 9y agoIt's kind of like taking out a mortgage to buy stocks, or, these days, bitcoin, and then expect to pay it off with dividends and appreciation.
- astrange 9y agoExcept that would be your problem to pay off, but here they get out of it and the seller(!) ends up responsible.
- pjc50 9y agoSimilar to Maplin: http://www.coppolacomment.com/2018/03/the-sad-story-of-maplin-electronics.html http://www.coppolacomment.com/2018/03/the-sad-story-of-mapli... Note the use of an elaborate corporate structure which involves a company paying its parent company 16.5% (!) on debt.
- ascagnel_ 9y agoWorth noting here: TRU was paying about that much (~$400MM/yr on $5B) on its debt as well.