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Politics : View from the Center and Left
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To: Lane3 who wrote (94705)11/7/2008 10:21:45 PM
From: Cogito  Read Replies (1) of 541477
 
>>The benefit of bankruptcy is that it enables the court to eliminate liabilities. There's no other way to get rid of them. They could reduce the massive burden of their classic employee benefit packages, for example. <<

Karen -

Yes, bankruptcy eliminates liabilities. It also eliminates all value in common stock held by investors, in many cases. And the liabilities it eliminates are often liabilities to smaller companies that can't afford to foot the bill for the bankrupt company.

The ramifications of any large company's bankruptcy are widespread, and largely very negative. Actually, when you look at it dispassionately, you can see that the liabilities are not eliminated, they are just transferred to other, usually smaller entitities. The bankrupt company goes on, and their stockholders and creditors foot the bill.

- Allen
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