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Giving customers higher preference would indeed be possible if agreed ahead of time. But it would increase borrowing costs as bond holders would now be subordin

Giving customers higher preference would indeed be possible if agreed ahead of time. But it would increase borrowing costs as bond holders would now be subordinate. Don’t expect it to happen unless a law mandates it - consumers don’t have enough bargaining power. In the case of this bankruptcy preferring customers would be changing the rules after the game had started. Even if you did it a bankruptcy judge would be in his rights to claw back the cost from the consumer.

shkkmo 7y ago
It makes zero sense that lenders, who agreed to take on some risk, are allowed to steal money from customers who paid a product they never received and never decided to take on risk.
- jdsully 7y ago
  You take on the risk when you pre-pay for services you haven't yet recieved. By law you are also a creditor just like a bond holder. Similarly when you eat at a restaurant and pay at the end the restaurant is providing you credit. Most people don't think of it this way because the transactions go smoothly and the distinction is irrelevant. But it does affect what rights you have if something were to go wrong.
  - deleted 7y ago
    [deleted]
  - markdown 7y ago
    > Similarly when you eat at a restaurant and pay at the end the restaurant is providing you credit. https://www.youtube.com/watch?v=XebF2cgmFmU https://www.youtube.com/watch?v=XebF2cgmFmU
  - shkkmo 7y ago
    > You take on the risk when you pre-pay for services you haven't yet recieved. There are perhaps cases where this is true, when purchases are informed the the sketchy financial state of the company in advance and have the information necessary to assume the risk. It is ridiculous to assert that regular customers, who are purchasing an Airline ticket in the standard way that almost every, has done due diligence and should be treated the same as creditors who are given detail financial information. > Similarly when you eat at a restaurant and pay at the end the restaurant is providing you credit. Most people don't think of it this way because the transactions go smoothly and the distinction is irrelevant. But it does affect what rights you have if something were to go wrong. I think most places consider "dine and dash" a crime. You go to jail for theft because it is not a loan. Do you know of any jurisdictions that actually treat this as a loan?
    - jdsully 7y ago
      The fact the consumer didn’t do any due diligence doesn’t change the situation. Perhaps the situation should change - but somebody has to lose when promises can’t be fulfilled. As for dine and dash there is a difference when there is no intent to pay. If somehow between when you ordered and when it came time to pay you declared bankruptcy then the resteraunt is SOL. The short timeframe just means its very unlikely you had intent to pay. For bankrupt companies you will see attempts to limit future expenses (i.e. cancelling employee trips etc) but the fact that there is a continual stream of transactions makes it much messier. It is fraud if the company racks up large numbers of unusual expenses just before bankruptcy is declared.
      - shkkmo 7y ago
        > The fact the consumer didn’t do any due diligence doesn’t change the situation. It is the reasonable expectations that differ. Customers are not expected to ask for (and will not be granted) financial information or proof of collateral. It is completely unreasonable to give those customers the same level of risk as creditors who are expected to ask for (and receive) such information. > It is fraud if the company racks up large numbers of unusual expenses just before bankruptcy is declared. So when a company does not currently have the financial ability to fulfill a purchase (say without obtaining a government bailout), how is it not fraud to sell a product and collect money without informing the customer of that risk? > As for dine and dash there is a difference when there is no intent to pay. I'd like to see you try telling your waiter "I'm a bit tight on money right now, you'll have to wait for next month for me to pay my bill." Let's see if they call the cops and you get arrested. Your argument is rather ridiculous.

shkkmo 7y ago

It makes zero sense that lenders, who agreed to take on some risk, are allowed to steal money from customers who paid a product they never received and never decided to take on risk.

jdsully 7y ago
You take on the risk when you pre-pay for services you haven't yet recieved. By law you are also a creditor just like a bond holder. Similarly when you eat at a restaurant and pay at the end the restaurant is providing you credit. Most people don't think of it this way because the transactions go smoothly and the distinction is irrelevant. But it does affect what rights you have if something were to go wrong.
- deleted 7y ago
  [deleted]
- markdown 7y ago
  > Similarly when you eat at a restaurant and pay at the end the restaurant is providing you credit. https://www.youtube.com/watch?v=XebF2cgmFmU https://www.youtube.com/watch?v=XebF2cgmFmU
- shkkmo 7y ago
  > You take on the risk when you pre-pay for services you haven't yet recieved. There are perhaps cases where this is true, when purchases are informed the the sketchy financial state of the company in advance and have the information necessary to assume the risk. It is ridiculous to assert that regular customers, who are purchasing an Airline ticket in the standard way that almost every, has done due diligence and should be treated the same as creditors who are given detail financial information. > Similarly when you eat at a restaurant and pay at the end the restaurant is providing you credit. Most people don't think of it this way because the transactions go smoothly and the distinction is irrelevant. But it does affect what rights you have if something were to go wrong. I think most places consider "dine and dash" a crime. You go to jail for theft because it is not a loan. Do you know of any jurisdictions that actually treat this as a loan?
  - jdsully 7y ago
    The fact the consumer didn’t do any due diligence doesn’t change the situation. Perhaps the situation should change - but somebody has to lose when promises can’t be fulfilled. As for dine and dash there is a difference when there is no intent to pay. If somehow between when you ordered and when it came time to pay you declared bankruptcy then the resteraunt is SOL. The short timeframe just means its very unlikely you had intent to pay. For bankrupt companies you will see attempts to limit future expenses (i.e. cancelling employee trips etc) but the fact that there is a continual stream of transactions makes it much messier. It is fraud if the company racks up large numbers of unusual expenses just before bankruptcy is declared.
    - shkkmo 7y ago
      > The fact the consumer didn’t do any due diligence doesn’t change the situation. It is the reasonable expectations that differ. Customers are not expected to ask for (and will not be granted) financial information or proof of collateral. It is completely unreasonable to give those customers the same level of risk as creditors who are expected to ask for (and receive) such information. > It is fraud if the company racks up large numbers of unusual expenses just before bankruptcy is declared. So when a company does not currently have the financial ability to fulfill a purchase (say without obtaining a government bailout), how is it not fraud to sell a product and collect money without informing the customer of that risk? > As for dine and dash there is a difference when there is no intent to pay. I'd like to see you try telling your waiter "I'm a bit tight on money right now, you'll have to wait for next month for me to pay my bill." Let's see if they call the cops and you get arrested. Your argument is rather ridiculous.