On eve of bankruptcy, US firms shower executives with bonuses

Re:On eve of bankruptcy, US firms shower executives with bon... by texasbigdata on Friday July 17, 2020 @11:46PM (#23878723)

This is patently false. 11s work. You know know how you can prove it? There’s less than a handful of chapter 22s (11, followed by an 11).

Fundamentally it’s better for society for capital structure participants to get wiped out, including most non-wage perpetuation liabilities than for the company to just die.

Greenspan wrote a sweeping history of American capitalism over 3 centuries (great book) and his belief was that American bankruptcy was one of the greatest contributors to long term economics growth. which is what roughly drives American average wellbeing (give or take).

Sorry but just not true.

[ Parent | on HN ]

Re:On eve of bankruptcy, US firms shower executives with bon... by lend000 on Saturday July 18, 2020 @12:08AM (#23878816)

You'll need a source for your aggressive claims -- these suggest that chapter 11 recidivism isn't that rare ("less than a handful" is patently false) [0][1]. And I wouldn't go so far as to abolish it, but to give debtors a stronger vote in the proceedings. Right now, the balance of power strongly favors shareholders, socializing the losses amongst creditors and prolonging the demise of companies that have no future (e.g. JC Penney).

[0] https://blogs.harvard.edu/bankruptcyroundtable/tag/chapter-2... [1] https://www.reuters.com/article/us-bankruptcy-repeats/compan...

[ Parent | on HN ]

Re:On eve of bankruptcy, US firms shower executives with bon... by texasbigdata on Sunday July 19, 2020 @12:14PM (#23890307)

Less than 1%. # of 22s (1) / total cases (2).

To your following point, that’s not how bankruptcy works. Creditors can credit bid, creditors can hand together and push a company into involuntary bankruptcy (not common), creditors have a tremendous amount of remedies whereas shareholders do not. It would be a super long discussion really chopping this up, as to why, however look up recovery rates for different assets and/or market prices for various liquid (aka tradeable) assets after a company files for bankruptcy. You will find the higher up the capital structure the security (aka secured debt, followed by unsecured debt, followed by equity) the higher the price/recovery/expected value.

The link you sent was interesting though. Thanks for sharing.

1. https://www.uscourts.gov/statistics-reports/us-bankruptcy-co... 2. https://www.google.com/amp/s/www.sissonlawoffice.com/blog/fi...

Quote: “ Radio Shack made the news in 2017 when it filed for Chapter 22. That second Chapter 11 came only two years after it underwent a restructuring in 2015. Instead of opting to continue the business, its owner, General Wireless Operations, chose to liquidate all the remaining retail outlets.” ....seems pretty rare to me.

[ Parent | on HN ]

Re:On eve of bankruptcy, US firms shower executives with bon... by onion2k on Saturday July 18, 2020 @03:26AM (#23879713)

American average wellbeing

Does that mean if Americans are, on average, deeply unhappy and far less well off than the median, it's evidence that the capitalist system is failing? Because I have some news for you...

[ Parent | on HN ]

Re:On eve of bankruptcy, US firms shower executives with bon... by texasbigdata on Sunday July 19, 2020 @12:22PM (#23890360)

I’m not sure that’s what that meant. The argument was more akin (and were really diverging from the topic) to Tyler Cowens philanthropy concept. Take two countries, country A and country B, one grows gdp at 2% per annum, the other at 3%. Tyler’s argument is that in, say 200 years, the difference due to compounding is greater than USA and (some poorer country) in 2020. Therefore if we can continue growing GDP it’s generally good for people as living standards are much higher. But I’m not a philosopher, and tbh Tyler is an economist.

[ Parent | on HN ]