6 ms·

There will be plenty of (legitimate) lawsuits if equity holders take a loss here.

by pbreit 6y ago

gruez 6y ago
why? AFAIK since they're in bankruptcy, they have zero obligation to shareholders, only to creditors.
- pbreit 6y ago
  But they are doing an equity offering? Got it.
  - camjohnson26 6y ago
    Their shares irrationally have value on the market, issuing equity allows them to pay off more of their debts. Why shouldn’t they issue, it’s the company’s job to release accurate information, not to force the buyers to make wise decisions. If someone offers you millions of dollars for your totaled car you’d be a fool not to take it, this is no different. Hertz management must be loving this.
    - pbreit 6y ago
      If the company knows stock purchasers are making a bad decision it would be obvious negligence.
      - pmiller2 6y ago
        Only if they don't disclose the serious risks involved, which they do, right up front in the very first few sentences of the filing.
      - RobRivera 6y ago
        no, every broker has a lovely warning about the nature of sec regulations and financial instruments risk of losing value. Negligence is in the investors lack of due diligence. Its why publicly traded companies must publish financials and why cooking the books is illegal and fraudulent
- pbreit 6y ago
  That's not really how it works. You cannot do an equity offering if you believe there is a good chance the value goes to zero. And the "obligations" are merely a starting point in negotiations. A strong starting point, for sure, but not set in stone.
  - nogabebop23 6y ago
    Only if they misrepresent the situation in their SEC filing, which (if you read the risks section) sure doesn't seem like they are. there's at least a 1/2 dozen instances of "because we are in bankruptcy protection <potential bad thing>"
- pmiller2 6y ago
  Shareholders are creditors, of a sort. They're just the very last ones in line.
  - RobRivera 6y ago
    No, they aren't. The retail market for business ownership is not a debt obligation, it is equity. Basic definitions

There will be plenty of (legitimate) lawsuits if equity holders take a loss here.

by pbreit 6y ago

There will be plenty of (legitimate) lawsuits if equity holders take a loss here.

gruez 6y ago

why? AFAIK since they're in bankruptcy, they have zero obligation to shareholders, only to creditors.

pbreit 6y ago
But they are doing an equity offering? Got it.
- camjohnson26 6y ago
  Their shares irrationally have value on the market, issuing equity allows them to pay off more of their debts. Why shouldn’t they issue, it’s the company’s job to release accurate information, not to force the buyers to make wise decisions. If someone offers you millions of dollars for your totaled car you’d be a fool not to take it, this is no different. Hertz management must be loving this.
  - pbreit 6y ago
    If the company knows stock purchasers are making a bad decision it would be obvious negligence.
    - pmiller2 6y ago
      Only if they don't disclose the serious risks involved, which they do, right up front in the very first few sentences of the filing.
    - RobRivera 6y ago
      no, every broker has a lovely warning about the nature of sec regulations and financial instruments risk of losing value. Negligence is in the investors lack of due diligence. Its why publicly traded companies must publish financials and why cooking the books is illegal and fraudulent
pbreit 6y ago
That's not really how it works. You cannot do an equity offering if you believe there is a good chance the value goes to zero. And the "obligations" are merely a starting point in negotiations. A strong starting point, for sure, but not set in stone.
- nogabebop23 6y ago
  Only if they misrepresent the situation in their SEC filing, which (if you read the risks section) sure doesn't seem like they are. there's at least a 1/2 dozen instances of "because we are in bankruptcy protection <potential bad thing>"
pmiller2 6y ago
Shareholders are creditors, of a sort. They're just the very last ones in line.
- RobRivera 6y ago
  No, they aren't. The retail market for business ownership is not a debt obligation, it is equity. Basic definitions