Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Cisco Systems, Inc. (CSCO) -- Ignore unavailable to you. Want to Upgrade?

To: Nikole Wollerstein who wrote (59602)	5/27/2002 1:51:36 PM
From: Zoltan!	Respond to of 77400

...As I understand most often during Bankruptcy Stockholders loose everything bond holders receive equity In new debt free company. It does not eliminate competition. Actually, secured creditors get first crack. Generally, bondholders may get equity, unless they resist and demand liquidation. Granted court approval, of course. (Reorganization vs. liquidation). Even if the courts deem the company viable, the emerging "debt free" company will find the competitive environment tougher, not easier. Bankruptcy throws the company into limbo and destroys already flagging morale. The process is rarely quick and easy. If and when the company emerges, lenders will demand higher rates and stricter terms than the well-heeled competition and customers will question their staying power. Lending to companies shedding market share and with negative revenue "growth" is high risk. Unsecured creditors, including some vendors, may resist doing business with a company that just got court approval to stiff them. Oh, and the best employees will be long gone. If you want a more complete understanding, look at the record of companies that emerge from bankruptcy. The record is anything but promising. A return trip to bankruptcy court is often in the offing.

To: Nikole Wollerstein who wrote (59602)	5/28/2002 12:00:36 PM
From: Jacob Snyder	Read Replies (1) \| Respond to of 77400

re: It (bankrupcy) does not eliminate competition: As I understand it, for buyers of telecom-equip, having a longterm relationship with their equip companies is very important, at least as important as price. Anything that puts into question whether a company will be around (to service and upgrade their equipment) in 5 years, will seriously hurt current sales. So, things like debt downgrades have a serious impact on telecom-equip companie's ability to make sales and maintain any pricing power.