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Stuctured bankruptcy
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Dr. Clayton Forrester RJ: Lou Bega CO: Nicholas Cage Post Rating: 1 + / - Total Posts: 2 Karma: 11 Joined: Apr 23, 2012 |
Posted on May 9, 2012 I recently blundered into buying and becoming the chairman of BANK, which is over 110 G in debt and has a networth of zero. The corp has about 1G worth of factories and stores, and can earn about 300-400M a day. But interest payments are several times that, so each day another 1.2 G is added to the debt automatically, and it is impossible for the company to ever recover.Throwing my unsellable "stinky shares" away would be okay, but I like the business's setup, and if I had an option to buy its factories and stores separate from the crippling debt, I probably would. My suggestion: First, implement "Chapter 7", or liquidation bankruptcy. When a public company has a networth of zero and revenue significantly below debt service payments, give the chairman the option to dissolve the company. When this is chosen, the company disappears and shareholders get zero. Next, implement "Chapter 11", or restructuring bankruptcy. (This is what I would choose for BANK, if the option existed in-game). When a chairman chooses this option the existing bankrupt company is eliminated, but its assets (inventory/buildings/technologies) are transferred to a newly created company which then undergoes an IPO. Cash equal to the value of the transferred assets is deducted from the money raised by the IPO, simulating the purchase of the old company's assets by the new company. |
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Aaron Barr RJ: Aaron CO: Aaron Post Rating: 2 + / - Total Posts: 81 Karma: 74 Joined: Apr 13, 2012 |
Posted on May 9, 2012 Even under chapter 11 in this case, the creditors would be left in control of the company. That would mean the fictitious "bank" or robocitizens that loaned BANK the money. You'd be out regardless. Stock holders are last in line. Actual "lenders" will own the company. You don't get free stuff from declaring bankruptcy...
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Scott (Admin) RJ: Ratan Joyce CO: Ratan Joyce Post Rating: 2 + / - Total Posts: 1175 Karma: 5083 Joined: Jan 13, 2012 |
Posted on May 9, 2012 This one will certainly come AFTER the stock market is fixed, I'll raise a topic at that time to collect suggestions and opinions as I believe any simple implementation would be open to massive exploits, and nobody wants that after all the major problems we've seen since v0.30
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Dr. Clayton Forrester RJ: Lou Bega CO: Nicholas Cage Post Rating: 0 + / - Total Posts: 2 Karma: 11 Joined: Apr 23, 2012 |
Posted on May 10, 2012 Aaron, The equity holders in a bankrupt company are entitled to nothing, that is true. They should get zero. My suggestion is that a mechanism might exist where new investors could pool new money via an IPO, then buy the bankrupt company's assets from the bank/creditors/robotizens, and keep the original business going under a new corporation. The original shareholders, as you said, are out, unless they pony up more money to buy shares in the new corp. There's probably many different ways this could be implemented, though. I'll look forward to the discussion later, when Scott's ready. |
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