XM Satellite Radio Holdings Inc. (XMSR) Message Board

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Technology Stocks : XM Satellite Radio Holdings Inc. (XMSR)

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To: i-node who wrote (3154)	1/21/2007 8:50:51 PM
From: pcstel	Read Replies (1) of 3386

Duh. If a company can't be shown to be viable, bankruptcy isn't an option. The potential for profitability is a prerequisite to a bankruptcy. If you can't show the court a way to profitability, they will not be given protection. ??? I think you need to re-write that sentence. Here is a great case. A company was making a small profit, but had large debt obligatons. The debtors wanted management out. So the debtor agreed to amened the loan covenants. But, part of the new loan covenants was a clause that the company had to hire a CFO of the debtors chosing. Basically the banks wanted to put someone inside to see what was going on. The company agreed to the clause in order to get the note renegotiated.. However, 120 later... management refused to hire the CFO as required by the loan covenants. The morning the loan was to go into default, (not for financial reasons, but only because of the violation of the CFO requirement) the company filed for bankruptcy protection. In the end.. The CEO and all of the BOD and upper management ended up owning a nice chunk of the newly reorganized company, the company shareholders were wiped out. And so it goes, PCSTEL

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