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"You can't get blood from a stone". Even if you are one of the creditors. If the company is bankrupt the biggest creditors usually get paid first. In the case
by photonios 8y ago
"You can't get blood from a stone".
Even if you are one of the creditors. If the company is bankrupt the biggest creditors usually get paid first. In the case of Wow Air, that's most likely the companies that leased them the planes. Many creditors have to be statisfied before it's your turn as an invidiual.
Legally, you are indeed a creditor and you deserve to be paid back if possible. In reality, that rarely happens.
- londons_explore 8y agoHaving different classes of creditor ranked seems like almost fraud to me. A bank who has a higher priority with bankruptcy proceedings has a strong incentive to keep loaning out cash to the failing business at ever worse rates until just the moment that the assets no longer cover their outlay. At that point, they make the company bankrupt with the full knowledge all the other creditors will get nothing and they'll get their full capital back.
- ixwt 8y agoYou make a interesting point. I wonder if we've actually seen this in practice anywhere. Perhaps to avoid this, you receive a portion of the amount paid back to creditors equal to your percentage of debt owed?
- panarky 8y ago> the biggest creditors usually get paid first In bankruptcy, the size of the claim doesn't determine its priority. The law determines claim priority, and the company doesn't have much discretion. First in line are secured creditors who lent against collateral. In Wow's case, the airplanes collateralize most of the debt. Then comes employees, taxes and bank loans. After that comes unsecured bonds. Next are unsecured creditors with unpaid invoices. After that is preferred stock. And if there is anything left over, it goes to common shareholders.