4 ms·
Certain creditors giving up some of their claim can shift more money to other creditors effectively increasing the amount paid out by the estate, thereby satisf
by rtkwe 2y ago
Certain creditors giving up some of their claim can shift more money to other creditors effectively increasing the amount paid out by the estate, thereby satisfying more creditors so it's completely kosher just slightly odd. It's unusual because most companies are just companies and the creditors have less/no emotional investment in anything other than receiving the maximum amount of money from the bankruptcy.
- sidewndr46 2y agoI don't see what emotions have to do with it. If a business has a claim for $28 million in debt against a bankrupt company with near zero cash, I could easily see them saying "we'll bid the full $28 million for the asset X". Presumably the asset X has some non-zero value. Even if comically low (like a single small office building), collecting the value of that asset is much better than $0.
- rtkwe 2y agoEmotions come into it where some creditors are willing to forgo their portion of the sale proceeds for a particular outcome. That counts as the bid satisfying some portion of the debt and now other creditors potentially get more money from the bankruptcy. The law allows for this, banks do it all the time on foreclosure auctions splashing the bids with their outstanding loan amount making it unprofitable for others to bid and winning the house they can then sell in a regular manner.
- HWR_14 2y agoThe issue is when $50 million is owed and some of the debtors offer to give up their $28 million dollar claim for the building. But then there is no cash for the other debtors with a $22 million dollar claim. As opposed to selling the building for $1 million cash and everyone getting 2% of what they are owed.