OT: Great Day For Exxon, BP, and Haliburton

[Saint Johnny B]

Ever been a creditor in a BK proceeding? Here's what happens, you get pennies on the dollar for legitimate claims. Every one eats it. That is, except the big honcho's still running the company who all get big raises under the pretext that they will all jump ship. I always thought it was outrageous that the very people who said we've mismanged the company in some way and can't pay everything we owe, then get huge raises and are kept managing the company. One bankruptcy lawyer said of the Chap 11 process, "It's an invitation to a rape." The abuses bt big corporations are legendary, look at it as nothing more than a business decision to screw people. A legal scam by the big players with big law firms and armies of lawyers to put the right spin on it.

 

Hallibuton unit's are just screwing people left and right, just as Enron did.

 

One thing is certain, with the Big Dick C. in the White House, Halliburton will continue to pig out at the American taxpayers' expense.

 

The Big Dick loves handing them those "No-Bid, No Competition" Contracts, trouble is, Big Dick wants to screw the entire country.

[Saint Johnny B]

[schmee]

quote:

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Originally posted by DARKLAVA:

[GZsound]

Originally posted by Johnny B:

[QB]Ever been a creditor in a BK proceeding? Here's what happens, you get pennies on the dollar for legitimate claims. Every one eats it. That is, except the big honcho's still running the company who all get big raises under the pretext that they will all jump ship. I always thought it was outrageous that the very people who said we've mismanged the company in some way and can't pay everything we owe, then get huge raises and are kept managing the company. One bankruptcy lawyer said of the Chap 11 process, "It's an invitation to a rape."

 

YO! Your wrongness!! Are you listening?

 

Stop with the mindless chatter and read what you actually write.

 

Corporations cannot file Chapter 11 bankruptcy. Most corporate bankruptcy's are for reorganization not to wipe out debtors. Notice K mart is still around? Notice American Airlines is still around?

 

Actually, since facts make no difference to you anyway..never mind.

[alcohol_]

GZ, wrote:

 

"Corporations cannot file Chapter 11 bankruptcy. Most corporate bankruptcy's are for reorganization not to wipe out debtors. Notice K mart is still around? Notice American Airlines is still around?"

 

Maybe you should write to this author and relieve him of his ignorance:

 

Strategic Bankruptcy: How Corporations and Creditors Use Chapter 11 to Their Advantage

by Kevin J. Delaney

 

And this author too:

"Chapter 11 bankruptcy is very similar to Chapter 13. The main difference is that there is no limit regarding the amount of money owed by the debtor. Originally only intended for large corporations, individuals can now file Chapter 11 as well."

 

http://www.howstuffworks.com/question714.htm

 

In my experience with GZ, I've found that if he makes a factual claim, the opposite is usually true.

[Phil B]

In the US, Chapter 11 is for reorganizations. Chapter 7 is for liquidations.

[Griffinator]

That's correct. I filed Chapter 7 in 1998 - it was a liquidation proceeding.

 

Corporations do use Chapter 11 and 13 to restructure their debt, frequently with dramatically reduced totals. They still rip the creditors off, just not nearly as much as a full liquidation.

[alcohol_]

Griffinator,

 

I don't have any fucked up ideas about Libertarianism. I was spoofing WOW about him trying to suggest that JohnnyB was a Holocaust Revisionist .

 

Of course just because Timothy McVeigh was a self professed Libertarian doesn't mean that all Libertarians are domestic terrorists at heart. That kind of syllogistic thinking is a the standard right wing trick when accusing critics of being un-American. I'm not doing that.

 

Nevertheless, I've been listening to enough Dave Brudnoy, Gene Burns, and Harry Browne over the past twenty five years to know that Libertarians are intelligent but their intelligence is in the service of a fantasy. They believe they've come across a system that solves many problems, but they are as delusional as Communists.

 

The difference between Adam Smith and a Libertarian is that Adam Smith was an empiricist who was theorizing about economic practices while Libertarians are utopians who believe that the world can be ordered around the metaphysical principle of private property. To cut to the point, like Communists, if you want to have misery in life, throw away tradition and evolved institutions and replace them with radical idealism. Causes misery every time.

 

Metaphysics leads you into superstition and fantasy. I can't get with that.

[Saint Johnny B]

Thanks for showing that GZ was flat wrong on big corporations abusing Chap 11 process. It's done all the time. Corporate Reform Laws might be a step in the right direction about now, given all the abuses and scandals that are now going on.

 

When I speak with the average American, I find they are immensely practical people, thus, they borrow different ideas from many "isms" if they are believed to be workable solutions. As there may not be any pure "isms" out there in the world, except for dictatorships, perhaps a good way to look at America is as a "mixed system." Like Chinese menu---a little from column A, a little form column B and some from column C. Therefore it's pointless to argue about Socialism, Communism, Capitalism, etc. which in reality exist only on paper and not in real life.

 

But one thing is clear: Bush and Cheney are owned by the big special interests such as Exxon, BP, and Hallibuton.

[Griffinator]

FWIW, there are quite a number of things in the Lib policy platform that I don't agree with - things like abolishing the limitations on mergers. The Libs have also made no official stand on the Supreme Court's decision to recognize corporations as legal entities, and that to me is a crucial pivot point on their stand on personal responsibility. In essence, if the Libs do not condemn this declaration by the high court and press for a constitutional overturn of the Court's postition, the rest of their platform on personal responsibility falls apart in bankruptcy court.

 

The personal property and personal responsibility principles, within the context of a democracy can work. They very much did work before the 20th century, when the Monroe doctrine became the law of the land, and the government felt compelled somehow to meddle in far, far too many personal issues.

[Saint Johnny B]

This is kind of what I'm getting at, there are parts you agree with and part you don't. For me, it's like that with most doctrines, parts I like, and parts I don't.

[GZsound]

Yes, thank you for pointing out my mistake.. Brain said Chapter 7, Fingers typed 11.

 

Please go back and insert 7 for 11 in my post and check to see if it doesn't make sense.

 

My point is that most corporations do not simply go out without paying any debts.

 

Most corporate bankruptcys are reorganizational.

 

That was my point and I'm sticking to it.

[Saint Johnny B]

Yeah, but the so-called "Reoganization Plan" in a Chap 11 process is really a way big corporations screw people. The creditors are lucky if they get 10 cents on the dollar, many don't get anything at all, but the corporation's execs get fantasic raises. That's why the backruptcy lawyer called it "An invitation to a rape." He meant that the big corporations abuse the process and screw the creditors, esp the little ones. Corporate Law Reform would be a good thing for this country.

 

In the meantime, some get sweetheart "No-Bid, No-Competition" contracts worth billions. Just another rape job.

[Phil B]

Originally posted by Johnny B:

the big corporations abuse the process and screw the creditors, esp the little ones

I don't know about that. The little creditors are "screwed" not so much by the corporation, but by the "big creditors" that have much more say in the process because they have more money in the game.

 

Generalizing as to how much creditors end up with when a company exits Chapter 11 (you said "10 cents on the dollar" -- but I mean any generalization) is pretty much meaningless. The ones that really lose in bankruptcy are generally the equityholders, who pretty commonly end up with nothing. The creditors usually end up with all of the equity -- which says something interesting about the process ... if the company weren't worth saving as a going concern, the creditors would rather see the company liquidated than getting all of the equity. But, creditors generally do not want that. Yes, often to keep a company viable as a going concern, the creditors will have to pay (in order to retain) key employees.

 

The part of Chap 11 where management can "screw" people is when they continue to run the company as a debtor-in-possession and are able to take actions that the creditors might not want them to take (or, at least threaten such actions to gain some bargaining power). But, in a society that want to err on the side of keeping companies going in order to save jobs, that is probably the only way to artificially place power into the hands of management.

[Griffinator]

Originally posted by GZsound:

Yes, thank you for pointing out my mistake.. Brain said Chapter 7, Fingers typed 11.

 

Please go back and insert 7 for 11 in my post and check to see if it doesn't make sense.

 

My point is that most corporations do not simply go out without paying any debts.

 

Most corporate bankruptcys are reorganizational.

 

That was my point and I'm sticking to it.

Typically, whether personal or corporate, Chapter 11's do not require the debtor to repay all their loans. Very little of the overall amount of debt is actually repaid under a Chapter 11 protection. Often, it's as Johnny quipped - 10 cents on the dollar.

 

That, coupled with their uninterrupted control of the company, does not encourage executive boards to practice responsible financial policy, but rather encourages a company in trouble to get completely reckless, and in some cases (like Enron and Adelphia) fiscally abusive, knowing that reorganization is a short step away.

 

The problem here isn't really so much that they screw the creditors (their creditors are the companies who make their living screwing individuals to a wall) but that they screw their shareholders, who are stuck with worthless stock in an insolvent company.

[Saint Johnny B]

Well from where I sit, the D.I.P (DIP) process, where the existing management stays in control screws everybody except the existing management who give themselves raises. But I need not address all the legendary abuses here, just realize that it's usu a screw job.

 

So I see that Hallibuton's overcharging the government more than 61 million dollars is getting a little more press.

[GZsound]

Originally posted by Griffinator:

Typically, whether personal or corporate, Chapter 11's do not require the debtor to repay all their loans. Very little of the overall amount of debt is actually repaid under a Chapter 11 protection. Often, it's as Johnny quipped - 10 cents on the dollar.

 

In the many individual chapter 11 bankruptcy cases I have dealt with over the last 10 years, the payment plan normally pays off the entire debt unless it is a undocumented loan or debt.

 

I also seem to remember some corporations going through 11 and 13 bankruptcy years ago and still remain in business today. Those companies most certainly have had to make some restitution to their creditors. And that restitution may be settlements of pennies on the dollar.

 

;b]That, coupled with their uninterrupted control of the company, does not encourage executive boards to practice responsible financial policy, but rather encourages a company in trouble to get completely reckless, and in some cases (like Enron and Adelphia) fiscally abusive, knowing that reorganization is a short step away.[/b]

 

Again, in my experience, the company is not simply left to run with the same executive boards and CEO etc. There is a court appointed trustee that oversees the financial dealings of the corporation. However, I will agree there is ample ability for a bankrupt corporation to continue in malicious trade practices.

 

The problem here isn't really so much that they screw the creditors (their creditors are the companies who make their living screwing individuals to a wall) but that they screw their shareholders, who are stuck with worthless stock in an insolvent company.

 

Other than you seem to ignore the fact their suppliers and creditors are just people trying to make a living and not necessarily screwing individuals to the wall.. You are correct.

 

How can you make a statement that all of a corporate creditors are companies that make a living screwing individuals? Pretty broad brush and a pretty sad attitude.

[Saint Johnny B]

Over Sixty Million Dollars ($60,000,000.00) in phony overbilling

[Phil B]

Originally posted by Griffinator:

The problem here isn't really so much that they screw the creditors (their creditors are the companies who make their living screwing individuals to a wall) but that they screw their shareholders, who are stuck with worthless stock in an insolvent company.

Forgetting for the moment the bankruptcy process and whether that needs reform, equity is the first loss position. The risk of bankruptcy (even if liquidation was the only option) always exists for a company (public or private) and is one of the major factors to consider when pricing equity values. So, the bankruptcy process does not exist to protect equity holders. In a sense, once a company goes bankrupt, you sort of assume the equity gets wiped out -- that's bankruptcy. They only get something if all of the debt holders (who by definition are senior in priority to the equityholders) are paid in full, which is uncommon and the reason why it appears shareholders get "screwed" in the bankruptcy process. But, like I said, the bankruptcy process was not created to help them -- they are typically assumed to have been wiped out and that is why they have very little power in the process. The purpose of the bankruptcy process is to assist in the orderly payment and negotiation of CLAIMS so you don't have a "race to the courthouse" and whomever forecloses first wins at the expense of all other creditors. If the creditors think the company is worth more as a going concern than as a liquidated lump of assets, then it will want it to continue, but they will want to keep that added value (as they should) and that's why the debtholders generally become the stockholders.

 

Whether the DIP rules need reform is another matter. But, generally I think the power given to management in that process is a function of "job protection" in America. It is a method to protect jobs by taking some power away from the liquidators. Whether the net result there is a good thing is certainly open to debate.

[Griffinator]

Mark - you are correct. What I should have said was "typically these are companies make their living screwing individuals" - the big banks like Chase Manhattan, Citibank, etc very much fit this description. Obviously suppliers that extend credit terms to companies are not out to screw people.

[Saint Johnny B]

Instead of "of the people, by the people, for the people," Bush and Cheney and others have made the rules now say, "of the big corporations, by the big corporations, and FOR the big corporations."

[Griffinator]

Johnny - where the hell have you been?

 

People have been saying that about our government for years. The correct phrase is, however,

 

A government of the people, by the corporations, and for the corporations.