3 ms·
$2B for what was suppose to be $12B of AUM. Doesn’t sound like a vote of confidence. Question is what priority are funds distributed. Depositors are unsecur
by adrr 4y ago
$2B for what was suppose to be $12B of AUM. Doesn’t sound like a vote of confidence. Question is what priority are funds distributed. Depositors are unsecured creditors. Are there secured creditors that would be before them?
- metacritic12 4y agoIf it's like any bailout of the past, it probably zeroes a lot of people. A troubled company's balance sheet usually looks like: Assets: A Mess Liabilities: A Mess None of the claimholders (liabilities) know what they can withdraw, when, etc. A "buying asset" bailout often happens when someone (like Goldman here) comes in to buy only the gross assets. They will pay $2 bln in cash for the assets, and divorce the two messes. The two companies afterwards are now: NewCo: Asset: A Mess Liabilities: None, other than their new single equityholder, Goldman. OldCo: Asset: $2bln Liabilies: A Mess. NewCo is controlled by one person (or a tight group) and can unwind its positions slowly at leisure, waiting for prices to go up, with no more (financial) liquidations. OldCo has a much easier time. All creditors are called to line up in order. A judge decides who is most senior. The senior most people go collect their money (chunk of $2bln first). People queue up until the money is gone. In the highly unlikely case there is any money left after all claims are paid, the money goes to the old Celcius equityholders.
- moneywoes 4y agoAny precedent for this?
- prirun 4y agoYou can bet the highest priority will be to Goldman, with anyone else coming after.