3 ms·
The legal term of art for this is "fraudulent conveyance". "We strip off all assets and then declare bankruptcy" has been a known failure mode for like 500 yea
by slavboj 4y ago
The legal term of art for this is "fraudulent conveyance". "We strip off all assets and then declare bankruptcy" has been a known failure mode for like 500 years.
cf, https://en.wikipedia.org/wiki/Fraudulent_Conveyances_Act_1571 https://en.wikipedia.org/wiki/Fraudulent_Conveyances_Act_157...
- jon_richards 4y agoI’ve wondered if “stripping assets” should require a sort of liability insurance. In the simple case: a company requires 5m in liability insurance to give out 5m in dividends. If the company later declares bankruptcy, any creditors/regulatory agencies can go after the insurance company.
- missedthecue 4y agoGiven the high bankruptcy rate of newer businesses, I'm not even sure how insurance could be feasible unless the policies cost millions per year. Which is a non-starter obviously.
- rdtwo 4y agoAlso known as private equity playbook