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> You shouldn't be able to borrow money to buy a company, then transfer the debt used to buy the company on to the company itself. Why not and how would you st
by koolba 8mo ago
> You shouldn't be able to borrow money to buy a company, then transfer the debt used to buy the company on to the company itself.
Why not and how would you stop? It’s no different than a company issuing bonds to buy back its own equity.
I agree that it’s contributing to the enshitification of many end consumer industries, but I’m not sure what such a “ban” would look like it practice.
- KPGv2 8mo agoIt really does feel like the onus is on the original lender (who owns the debt) to police how it gets transferred.
- HWR_14 8mo ago> It’s no different than a company issuing bonds to buy back its own equity. Which was illegal until 1982 and could be made illegal again.
- JackFr 8mo agoA firm can be capitalized by debt or equity. They can have a public offering to and sell share to retire debt. They can issue bonds and use the money to buy back shares. There shouldn't be a moral component to this. That being said, it seems criminal to take an enormous management fee while sending a company into bankruptcy.
- jerf 8mo agoMany things far more complicated than this have been made illegal. And yes, people will try to wiggle around it. That's what regulatory agencies are for. Yeah, they don't 100% work. Believe me, you're unlikely to out-cynic me. It should still be illegal.
- calmbonsai 8mo agoIn practice, a "ban" consists of personal loan guarantees of a certain percentage thereby limiting the frequency and magnitude of this sort of financing. Essentially, that means some amount of corporate risk is leveraged upon the principal investors. This is common practice in the EU for so-called "club deals".