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Why would the shareholders do that if they think the government may step in and bail them out?
by atlasunshrugged 7y ago
Why would the shareholders do that if they think the government may step in and bail them out?
- tomp 7y agothat's why the government should never bail out shareholders. Bail out the company, sure - if the company is vital for "the system" (which airlines are, long-term) - but only after bankruptcy, i.e. wiping out the shareholders.
- beefield 7y agoPreferably also some debt holders should be wiped out. Otherwise it becomes too cheap to leverage your company if you need to pay only risk-free rate on your debt.