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> Does China just tell Evergrande's creditors "too bad"? In a broad sense, that's how bankruptcy works in the west too. The government has rules for who gets
by kube-system 3y ago
> Does China just tell Evergrande's creditors "too bad"?
In a broad sense, that's how bankruptcy works in the west too. The government has rules for who gets paid first, and everyone else is SOL.
- bozhark 3y agoDepends on what chapter is filled and approved
- kube-system 3y agoDischarge can happen under both 7 and 11 which are the most common in the US. Chapter 7 is the equivalent of what is being discussed in this particular case.
- loeg 3y agoYeah but in the west it is based on claim seniority rather than like, hose foreign creditors first.
- faeriechangling 3y agoWhich is why the west has been getting taken for a ride for years.
- kube-system 3y agoNo, in the US, claims are paid out based on the type of debt, outlined in the Absolute Priority Rule.
- loeg 3y agoWe are talking about the same concept but with different terminology. Not "No, ...".
- kube-system 3y agoMaybe we are, but I'm not really sure 'seniority' is a great word to describe it. The term usually implies ranking due to duration. But it's really just a ranking prescribed by law. Often the shortest term lenders who are facilitating the bankruptcy process are first!
- AlbertCory 3y ago"senior" is a term of art, and entirely appropriate: https://www.investopedia.com/terms/s/seniordebt.asp https://www.investopedia.com/terms/s/seniordebt.asp
- kube-system 3y agoI stand corrected, thanks.
- nradov 3y agoExcept when it's politically advantageous to change the rules. During the GM bankruptcy and bailout in 2009, President Obama gave his supporters in the UAW a sweetheart deal which allowed them to recover more than the other unsecured creditors. This set a terrible precedent and undermined the rule of law.
- gerdesj 3y agoIn the UK, its basically HMRC first, then banks/building societies. If there is anything left, everyone else gets a share. The last one my company dealt with, we got about 10% of our exposure back. So we got £1,000 instead of the £10,000 that was owed. We then got to write that off as a loss. This monster is in a different league to anything I've dealt with but the principles here would largely be the same but with less transparency and more money wandering off for a chat with shady characters. I suspect that the rules I might follow may be joined by some rather more complicated ones, when the sums involved are large enough and the corporate structures are complicated enough.
- blitzar 3y ago* unless they bail out the company, and its shareholders, with billions in taxpayer subsidies