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How is it that they can borrow that much money for struggling companies? I am quite perplexed at how banks view these deals if they (supposedly) regularly end u
by MattGaiser 3y ago
How is it that they can borrow that much money for struggling companies? I am quite perplexed at how banks view these deals if they (supposedly) regularly end up in bankruptcy.
Someone held that 7 billion in debt that went into bankruptcy. Why did a struggling company that was about to be strip-mined of assets get lent that money in the first place? And especially how did they get that money unsecured by hard tangible assets such as real estate?
- s1artibartfast 3y ago>I am quite perplexed at how banks view these deals if they (supposedly) regularly end up in bankruptcy. The answer is simple and boring. Despite high profile failures, the investment on average are profitable for banks.
- shiroiuma 3y agoUntil they aren't. Sometimes banks fail, and then taxpayers seem to be on the hook to bail them out: SVB, the 2008 meltdown, the Savings and Loan scandal, etc.
- s1artibartfast 3y agoSimple solution is to stop bailing out banks. At least the taxpayers werent on the hook for SVB, Other banks paid for that one via insurance. That said, we havent had a leveraged-buyout bailout yet, so the larger point is still accurate. These deals are profitable.