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What is the actual method that a state government such as California (or Arkansas for that matter - I'm sure they would love to own Walmart) can use to seize co

by yucky 4y ago

What is the actual method that a state government such as California (or Arkansas for that matter - I'm sure they would love to own Walmart) can use to seize control of a private company, fire the board of directors, cut out shareholders and then take ownership etc.? The closest I can find is eminent domain which they can use to obtain privately owned land, but nothing that gives them the power to do what you're describing. Can you point me in the right direction?

toomuchtodo 4y ago
If PG&E requires taxpayer subsidies, withhold them and buy the assets out of bankruptcy (negating the need to negotiate with a board, shareholders, or the C-level). Show up to bankruptcy court prepared to wire the funds to the trustee. You want to avoid paying top dollar to people who have a proven track record of mismanaging the enterprise, in order to not reward the behavior. As a last resort, eminent domain offering fair market enterprise value and an orderly transfer of control.
- singleshot_ 4y ago
  In bankruptcy, wouldn’t all their assets be encumbered by security interests owned by their creditors/hand holders? Wouldn’t any normal bankruptcy just be a reorganization around the interests of the secured parties? I’m having trouble seeing how an obligation to pay subsidies, be it executory or not, would give the subsidisor any leverage in bankruptcy. Is the idea that the secured creditors need the subsidy too?
  - toomuchtodo 4y ago
    You have a lot of wiggle room to make what you want happen when you're the government, and arguing the finer points until an insolvency event occurs requires copious amounts of speculation. One of the country's largest utilities entering insolvency isn't a normal bankruptcy is a fact I hope we can agree on.
    - singleshot_ 4y ago
      If your suggestion is that a $39 billion utility filing in federal bankruptcy court means that an unsecured counterparty would be given enough “wiggle room” to insist they be paid before secured creditors on the theory that they owe the utility subsidies, then no, we definitely can’t all agree. No bankruptcy would be that abnormal because that wouldn’t be a bankruptcy; the goal of a bankruptcy is to preserve the estate for the creditors, while the model you seem to present destroys the estate for the good of the debtors.
  - toast0 4y ago
    At a bankruptcy auction, assets are sold free of encumbrance. Generally, secured creditors participate in bankruptcy auctions because they would prefer good funds over holding the assets that failed to provide for a solvent business.
- yucky 4y ago
  Neither of these is nationalization, and both examples you provided that are a different approach of trying to use state power to crush a private business have never been tried or tested in court, where they would fail. So I'm hoping the parent poster can correct their post since there is no method for a US state to nationalize a company. It doesn't exist, and as a fiction, it should be treated as such.
pfdietz 4y ago
The state of Maryland was famously going to seize the Baltimore Colts. The owner got wind of it, packed the franchise's files into a semitrailer and was across the state line before morning. Sorry, Maryland, it's an Indianapolis team now.
- yucky 4y ago
  Not quite. NFL teams are franchises of the NFL, and owners of the other teams have to agree to ownership changes of each franchise. It's also not true that he suddenly "got wind of" anything, he'd been planning to move the team for 7-8 years and had very public spats with the city for years over it. He didn't tell the city ahead of time about the move because they had been at war with each other for many years.
jcampbell1 4y ago
Generally the way socialists nationalize is by bankrupting the company with massive tax bills, fines, or price caps. They then take control out of bankruptcy or buy the company for a pittance. NYC took control of the subways by capping fares which bankrupted the private operators.

by yucky 4y ago

toomuchtodo 4y ago

If PG&E requires taxpayer subsidies, withhold them and buy the assets out of bankruptcy (negating the need to negotiate with a board, shareholders, or the C-level). Show up to bankruptcy court prepared to wire the funds to the trustee. You want to avoid paying top dollar to people who have a proven track record of mismanaging the enterprise, in order to not reward the behavior. As a last resort, eminent domain offering fair market enterprise value and an orderly transfer of control.

singleshot_ 4y ago
In bankruptcy, wouldn’t all their assets be encumbered by security interests owned by their creditors/hand holders? Wouldn’t any normal bankruptcy just be a reorganization around the interests of the secured parties? I’m having trouble seeing how an obligation to pay subsidies, be it executory or not, would give the subsidisor any leverage in bankruptcy. Is the idea that the secured creditors need the subsidy too?
- toomuchtodo 4y ago
  You have a lot of wiggle room to make what you want happen when you're the government, and arguing the finer points until an insolvency event occurs requires copious amounts of speculation. One of the country's largest utilities entering insolvency isn't a normal bankruptcy is a fact I hope we can agree on.
  - singleshot_ 4y ago
    If your suggestion is that a $39 billion utility filing in federal bankruptcy court means that an unsecured counterparty would be given enough “wiggle room” to insist they be paid before secured creditors on the theory that they owe the utility subsidies, then no, we definitely can’t all agree. No bankruptcy would be that abnormal because that wouldn’t be a bankruptcy; the goal of a bankruptcy is to preserve the estate for the creditors, while the model you seem to present destroys the estate for the good of the debtors.
- toast0 4y ago
  At a bankruptcy auction, assets are sold free of encumbrance. Generally, secured creditors participate in bankruptcy auctions because they would prefer good funds over holding the assets that failed to provide for a solvent business.
yucky 4y ago
Neither of these is nationalization, and both examples you provided that are a different approach of trying to use state power to crush a private business have never been tried or tested in court, where they would fail. So I'm hoping the parent poster can correct their post since there is no method for a US state to nationalize a company. It doesn't exist, and as a fiction, it should be treated as such.

pfdietz 4y ago

The state of Maryland was famously going to seize the Baltimore Colts. The owner got wind of it, packed the franchise's files into a semitrailer and was across the state line before morning. Sorry, Maryland, it's an Indianapolis team now.

yucky 4y ago
Not quite. NFL teams are franchises of the NFL, and owners of the other teams have to agree to ownership changes of each franchise. It's also not true that he suddenly "got wind of" anything, he'd been planning to move the team for 7-8 years and had very public spats with the city for years over it. He didn't tell the city ahead of time about the move because they had been at war with each other for many years.

jcampbell1 4y ago

Generally the way socialists nationalize is by bankrupting the company with massive tax bills, fines, or price caps. They then take control out of bankruptcy or buy the company for a pittance. NYC took control of the subways by capping fares which bankrupted the private operators.