4 ms·
I have trouble seeing how this is Something That Needs Fixing(tm). It's a shareholder problem because it's shareholder capital being spent on these bonuses. Bo
by gwbrooks 6y ago
I have trouble seeing how this is Something That Needs Fixing(tm).
It's a shareholder problem because it's shareholder capital being spent on these bonuses. Both pre- and post-bankruptcy, shareholders are in the primary position to fix it.
- justicezyx 6y agoBut we're shareholders grant the effective tools for controlling? I think there is none such tools for shareholders to curb such misconduct
- lend000 6y agoIt isn't shareholder capital; it's almost always creditor capital when a public company is going bankrupt. It's a broken process when creditors don't get a vote in whether a company can apply for Chapter 11 bankruptcy (as opposed to Chapter 7 where the company assets are just liquidated). It incentivizes shareholders to vote for Chapter 11 because they know during a Chapter 7 their shares will be worthless anyway, because there won't be much (if anything) left after paying off debt.
- hedora 6y agoIt’s not just creditors that get screwed. Many of these companies have pension plans that will likely be zeroed out during bankruptcy. Also, if the company no longer exists (or contracts to cover the bonuses), then it stops serving whatever societal purposes it used to serve. For retail, all the infrastructure supporting the malls ends up being wasted, suppliers go bankrupt, communities lose jobs, neighboring stores fail once the mall loses its anchor store, etc, etc.
- gumby 6y agoActually that’s not the case: in bankruptcy the shareholders are at the end of the line behind (in order): taxes, payroll, than the varying degrees of debt and other creditors. Only if anything is left is it distributed to the various degrees of shareholders. If there’s anyone to object it would presumably be the primary debt holders.