A discussion about why nation-by-nation bankruptcy fails when dealing with global enterprises, here.
Comments
One response to “Two worlds and in between”
Ebenezer Scrooge
I would disagree, if bankruptcy systems gave a priority to nonadjusting creditors.
Adjusting creditors (i.e., banks and bonds) almost always fund through the parent. If there were only adjusting creditors, subs really couldn’t go bankrupt–they would be simple bags of assets and flow-through vehicles for incidental liabilities like trade credit and paychecks. The problem here is that the non-adjusting creditors are stuck down in the subsidiary level, and they don’t receive a priority.
The problems of cross-border multi-entity insolvency are not inherent. They’re largely self-inflicted.
Comments
One response to “Two worlds and in between”
I would disagree, if bankruptcy systems gave a priority to nonadjusting creditors.
Adjusting creditors (i.e., banks and bonds) almost always fund through the parent. If there were only adjusting creditors, subs really couldn’t go bankrupt–they would be simple bags of assets and flow-through vehicles for incidental liabilities like trade credit and paychecks. The problem here is that the non-adjusting creditors are stuck down in the subsidiary level, and they don’t receive a priority.
The problems of cross-border multi-entity insolvency are not inherent. They’re largely self-inflicted.