This to me just sounds like semantics. Is there a point I'm missing? Bankruptcy is for failed companies, failed companies go bankrupt.
> Xcor owes them a full refund, and the only reason it won't happen is due to bankruptcy protections
Implying that, absent bankruptcy protections, the customers would somehow get their money back. My point was that, even if bankruptcy protections didn't exist, and those debts couldn't be discharged, the customers are still never getting their money back because it was spent on R&D and the company itself is now valueless.
No, bankruptcy is not exclusively for failed companies.
And failed companies don't always go bankrupt.
It's only fraud if they misrepresented the fact that it didn't yet exist, which seems very unlikely.
Buying things that don't yet exist happens all the time. Thousands of people put down deposits on Tesla Model 3's that did not then exist. People regularly buy houses under construction, and people often lose money when the contractor fails to deliver. It happens all the time.
Fraud can pierce the veil, so it's not just the company that they can go after, but also anyone responsible for the fraud.
... But where I am, bankruptcy only lasts 3 years + 1 day, after which point, those that had shares within the entity that has failed, or the part-owners, will be required to begin paying back their debts. Bankruptcy is not a failsafe to prevent you paying all debts. It's just a timeout to give you time to be in a position to pay those debts. And yes, it can be declared multiple times, but it won't always be accepted.
When such a company runs out of money, nobody else will be required to come up with cash to pay its debts. You don't need to read the bankruptcy laws to verify that, it's just the definition of a limited liability.
The USA having bankruptcy protections is what helps foster this level of risk and entrepreneurship here.
In this case, Xcor would need to pay back the fees they said would go to escrow. Not any investor who took equity on the gamble it would be worth something.
Certainly, if people were promised that there was money in escrow and it wasn't, that sounds like fraud, but that doesn't mean those who perpetuated the fraud have the money either.
I don't know the details of the situation but fraud happens all the time as well and without having more information, I wouldn't discount it as a possibility.
It's not at all the same situation as buying a "ticket" for a rocket that hasn't even been built yet; those funds are going to be spent on R&D with no guarantee of success, and you're never going to get your money back; the best case scenario is you get to take the trip.
Literally every business/engineering project ever.
When you purchase a ticket on a spacecraft that doesn't yet exist, hasn't even been fully developed yet, and that no one has ever flown on, it's quite a different situation. I don't think the company lied about any of these facts. It should have always been clear that there was more risk involved.
And the reason the refund won't happen has little to do with bankruptcy protections and everything to do with the fact that the company failed. It turns out what they had tried to do was harder than expected, and they spent all their money without coming close to the end goal. That money is gone and won't be coming back, regardless of anything having to do with bankruptcy. As the saying goes, you can't squeeze blood from a stone. In theory they may be owed their $100k back, but in practice they'll never get it because it's no longer there.