This called a "leveraged buyout". Everyone who learns about them is shocked, and they absolutely should be illegal, but they aren't. It's very common for companies purchased in this way to go bankrupt, because the debt is too heavy a burden. Many name brand companies have gone down over the last decade because of this.

Lot of people who trusted Elon are going to lose their money then. Are we going to see consequences on Elon's well being?

Those people should have done more diligence. The text messages with Larry Ellison show he committed 1 billion dollars more or less on a whim.

It's pretty easy to see now that buying Twitter and saddling it with debt was never going to work.

Yeah but like, if nothing else I imagine Musk is never going to get people to hand him a billion dollars on a whim again? I would think that screwing over this many investors simply has to cause a blow to one's credibility.

> Lot of people who trusted Elon are going to lose their money

Good. Trust Elon the same way you'd trust Lex Luthor.

Last decade? Leveraged buyouts were a big thing in the 80s/90s, so this has been going on for over 30 years. This research showed that about 20% of LBOs resulted in bankruptcy: https://www.institutionalinvestor.com/article/b1gfygl4r8661f....

Why shouldn't it be legal? The entities that gave the loan knew the risks.

> Why shouldn't it be legal?

Because it's destructive to the economy. The only winners when this happens are the execs who arranged the deal, which is why Twitter's execs pushed so hard for the Musk deal to close even though the outcome was going to be bad for everyone else.

To put it another way - a lot of businesses would still be operating and a lot of people would still have jobs if LBOs were illegal.

The only winners were the Twitter shareholders, who the execs are supposed to represent.

This has been a trend in this late stage Capitalism, if you will. A large group of people spend years and decades building a company that can still grow and produce immense wealth over long-term, but a bunch of grifters roll in and sell it for parts, because "shareholders".

The job of the board is to assure long-term growth of the investment, not a one-time burn-it-all-down event or a slow bleed (GE, Boeing) where the shareholders get unreasonable returns while annihilating the hard work building up the company.

These are not company-building boards, these are company-destroying boards. Literally, vulture capitalists from the inside.

Wall St. calls it "Creative Destruction"