4 ms·

So you're saying in Germany the government can force a company to keep operating? That's doesn't sound like a good thing.

by refurb 4y ago

lmm 4y ago
The US government also can and does "force a company to keep operating" in the case where e.g. there's a dispute between two groups of shareholders and/or creditors, one of whom wants to shut it down and the other doesn't. Bankruptcy courts do that all the time; for the court of chancery to do it is rarer but it happens. The difference is that Germany recognises that the workers are also legitimate stakeholders with an interest in the business' continued operation.
- refurb 4y ago
  That's a different situation that the grandparent mentioned. If I'm running a business in the US and I decide that our goose is cooked and it's eventually going to fail, I can just decide to wind it down and close it (if I have control of the company). You're saying that Germany can actually tell the company "no, you're not shutting down"? That's just odd.
  - lmm 4y ago
    > if I have control of the company And there's the rub. If it's not clear who has control and two competing groups think they have control, the court will mediate, at least until things are sorted out (and might force e.g. a Texas Shootout). In Germany, subject to certain conditions (the company being large enough, having enough employees with long enough tenure, etc.), you can't have 100% control of the company even if you've bought 100% of the shares. The employees are a recognised stakeholder and you have to reach consensus with them to make changes, the same as any other situation where you share control of a company with some other party.
    - refurb 4y ago
      So what you're saying is if I as an investor fund a company 100%, I can't shut it down unless employees agree? That sounds terrible.
      - lmm 4y ago
        It seems natural to me. You may have poured a lot into the company but so have the employees; you shouldn't be able to unilaterally tear up everything you've built together.
        refurb 4y ago
        I’ll throw out an edge case. You invest $10M in a new company, most of it in equipment. Hire 10 people who then form a work council (work councils are possible over 5 employees). 3 months in you realize the business will flop, it was a bad idea, so you want to shut it down and sell all the assets and recoup what you can of your investment. So the work council can say “no”? You're basically forced to run the business until it goes bankrupt? Thats nuts.
        jquery 4y ago
        People lose $10m all the time gambling on a new business, I don’t see the issue here. Don’t start what you can’t finish.
        lmm 4y ago
        Well I understand they wouldn't be eligible to form a works council until they've been working there for at least 6 months. But that aside: 10 people have rearranged their lives for you, perhaps relocating or turning down other opportunities, and you think you should be able to shut off their livelihood on a whim? Now that's nuts. The works council can't say "no" arbitrarily - in the worst case you go to arbitration and convince the arbitrator that the business really is going to flop - but they get a seat at the table and a chance to propose/negotiate alternatives to just shutting down.

So you're saying in Germany the government can force a company to keep operating? That's doesn't sound like a good thing.

by refurb 4y ago

So you're saying in Germany the government can force a company to keep operating? That's doesn't sound like a good thing.

lmm 4y ago

The US government also can and does "force a company to keep operating" in the case where e.g. there's a dispute between two groups of shareholders and/or creditors, one of whom wants to shut it down and the other doesn't. Bankruptcy courts do that all the time; for the court of chancery to do it is rarer but it happens. The difference is that Germany recognises that the workers are also legitimate stakeholders with an interest in the business' continued operation.

refurb 4y ago
That's a different situation that the grandparent mentioned. If I'm running a business in the US and I decide that our goose is cooked and it's eventually going to fail, I can just decide to wind it down and close it (if I have control of the company). You're saying that Germany can actually tell the company "no, you're not shutting down"? That's just odd.
- lmm 4y ago
  > if I have control of the company And there's the rub. If it's not clear who has control and two competing groups think they have control, the court will mediate, at least until things are sorted out (and might force e.g. a Texas Shootout). In Germany, subject to certain conditions (the company being large enough, having enough employees with long enough tenure, etc.), you can't have 100% control of the company even if you've bought 100% of the shares. The employees are a recognised stakeholder and you have to reach consensus with them to make changes, the same as any other situation where you share control of a company with some other party.
  - refurb 4y ago
    So what you're saying is if I as an investor fund a company 100%, I can't shut it down unless employees agree? That sounds terrible.
    - lmm 4y ago
      It seems natural to me. You may have poured a lot into the company but so have the employees; you shouldn't be able to unilaterally tear up everything you've built together.
      - refurb 4y ago
        I’ll throw out an edge case. You invest $10M in a new company, most of it in equipment. Hire 10 people who then form a work council (work councils are possible over 5 employees). 3 months in you realize the business will flop, it was a bad idea, so you want to shut it down and sell all the assets and recoup what you can of your investment. So the work council can say “no”? You're basically forced to run the business until it goes bankrupt? Thats nuts.
        jquery 4y ago
        People lose $10m all the time gambling on a new business, I don’t see the issue here. Don’t start what you can’t finish.
        lmm 4y ago
        Well I understand they wouldn't be eligible to form a works council until they've been working there for at least 6 months. But that aside: 10 people have rearranged their lives for you, perhaps relocating or turning down other opportunities, and you think you should be able to shut off their livelihood on a whim? Now that's nuts. The works council can't say "no" arbitrarily - in the worst case you go to arbitration and convince the arbitrator that the business really is going to flop - but they get a seat at the table and a chance to propose/negotiate alternatives to just shutting down.