3 ms·
>3. Have the original take debt and pay the money to the spinoff I asked this same question of my accounting prof in grad school. His answer was "You guys are
by bduerst 8y ago
>3. Have the original take debt and pay the money to the spinoff
I asked this same question of my accounting prof in grad school. His answer was "You guys are very good at coming up with ways to commit fraud". Basically shareholders will sue the crap out of you - diverging debt is a very careful and meticulous process, and bag holders have legal recourse to come after you.
- baud147258 8y agoBut what if the majority shareholder is the one doing it? From what I've understood, Lampert (and/or his fund) is the biggest shareholder
- bduerst 8y agoIt's assumed you're a minority shareholder doing the suing, since the majority is required to approve the split to begin with. Individual shareholders have contractual rights that are guaranteed by the shareholder's agreement with the corporation, and shareholders will sue if there is negligence or other violations of this agreement. There are also varying degrees of control/rights depending on the class of equity - it's one of the reasons Warren Buffet only buys preferred stock.