8 ms·
How is that legal?
by betaby 3y ago
How is that legal?
- klausa 3y agoWhy would it not be?
- sonicanatidae 3y agoEven if it was illegal, I suspect the pittance fine attached for it would do little to dissuade anyone.
- JumpCrisscross 3y ago> if it was illegal, I suspect the pittance fine attached for it would do little to dissuade anyone You’d let shareholder lawsuits sort it out. They’re the injured party, after all.
- jeltz 3y agoNo, other debtors could also be the injured party.
- roflyear 3y agoShareholders are not the injured party here, they take risk when investing in companies.
- JumpCrisscross 3y ago> Shareholders are not the injured party here To the extent anyone is injured by this payment, it’s Softbank’s shareholders.
- roflyear 3y agoI mean in the bankruptcy...
- freejazz 3y agoIn a bankruptcy, you can clawback illicit payments made prior to the bankruptcy. It's actually very common that when a debtor goes under, they attempt to pay their preferred creditors as much as they can, without any regard to the priorities of other creditors.
- JumpCrisscross 3y ago> you can clawback illicit payments made prior to the bankruptcy SoftBank isn’t going bankrupt. WeWork is. If WeWork wired money to SoftBank right before going under, it’s fraudulent transfer. This is just SoftBank continuing to pay for its stupidity. The only way for other creditors to argue that money should be theirs is if SoftBank owed WeWork that money. But these creditors appear to have specifically struck the guarantee with SoftBank directly.
- robertlagrant 3y agoLawsuits beat fines for incentives and made whole-ness.
- sonicanatidae 3y agoJail doesn't make anyone whole after fraud, but it would make the next person thing twice, so of course, it's pittance fines, paid with other people's money. smh.
- Sanzig 3y agoIf bankruptcy is imminent, you're generally not allowed to show preference to a particular creditor right before a bankruptcy process. It depends on the jurisdiction, but in many countries the other creditors can petition the court to claw back the payment and put it back in the pot of assets so it gets fairly distributed. Obviously, if Softbank was the only creditor first in line it wouldn't be an issue, but if there are other creditors with equal seniority they would be rightfully upset. I can't read the FT article behind the paywall though, so I don't know which case applies here.
- llm_nerd 3y agoSoftBank made a promise on $1.75B of loans to WeWork from banks and is legally obligated because the latter going bankrupt just makes it fall to the former. SoftBank is likely to end up owning a significant percentage of the post-bankruptcy WeWork through a debt-equity swap, through which the company will have likely renegotiated most of its abhorrent leases (the overwhelming bulk of WeWork's debt was longterm lease obligations).