> Which obviously doesn't make sense in a bankruptcy, since the whole point is the creditors are not going to get paid back 100%

The creditors already own the asset. The estate is selling, not Alex Jones.

If you asked every creditor which bid they preferred, which do you think they'd choose? The creditors forgoing their claims obviously prefer one. As for the rest, they'll choose the one that pays them more: The Onion's bid.

This isn't how bankruptcy works in practice, but it's a good shorthand for what the correct answer should be.

> The creditors already own the asset.

The parent comment, quoted above is misinformation.

> The parent comment, quoted above is misinformation

What?

They quoted the relevant portion. The creditors do not own infowars already. A court appointed trustee is liquidating it, the owner has not changed (and will not until it officially sells).

The Onion's bid is the one where the creditors are applying their debt. The competing offer is more cash.

The whole point of bankruptcy is that the creditors do not get to vote and the solution that makes the majority happy isn't the best one. In an ideal bankruptcy everyone recovers the same percentage of their debt.

Certain creditors giving up some of their claim can shift more money to other creditors effectively increasing the amount paid out by the estate, thereby satisfying more creditors so it's completely kosher just slightly odd. It's unusual because most companies are just companies and the creditors have less/no emotional investment in anything other than receiving the maximum amount of money from the bankruptcy.

I don't see what emotions have to do with it. If a business has a claim for $28 million in debt against a bankrupt company with near zero cash, I could easily see them saying "we'll bid the full $28 million for the asset X". Presumably the asset X has some non-zero value. Even if comically low (like a single small office building), collecting the value of that asset is much better than $0.

Emotions come into it where some creditors are willing to forgo their portion of the sale proceeds for a particular outcome. That counts as the bid satisfying some portion of the debt and now other creditors potentially get more money from the bankruptcy. The law allows for this, banks do it all the time on foreclosure auctions splashing the bids with their outstanding loan amount making it unprofitable for others to bid and winning the house they can then sell in a regular manner.

The issue is when $50 million is owed and some of the debtors offer to give up their $28 million dollar claim for the building. But then there is no cash for the other debtors with a $22 million dollar claim.

As opposed to selling the building for $1 million cash and everyone getting 2% of what they are owed.