I presume the buyer won't take on the debt. The banks will take the write off, and the taxpayer will kindly cover this. The new buyers will get a good business at a bargain price, thanks to the taxpayer.
Hi Complainer
Has anyone raised corporate debt forgiveness in this thread?
That's the debt forgiveness, as the debt is liquidated with the company. If the owners have given personal guarantees, they are probably meaningless now, if the individuals are bankrupted or NAMA'd.If the company is in deficit, it will go into liquidation.
I guess the difference between the personal property/mortgage situation and the business situation is down to the ongoing value of the business (goodwill is the accounting term, I think) and the history of what happened here.Surely that says it all. This is not about debt forgiveness, as I understand the term. If I say to my creditors, "sorry, I am insolvent" and they bankrupt me, I don't consider that debt forgiveness.
If I owe €400k on a house worth €300k and the lender writes down the loan to €300k while leaving me with ownership of the house that is debt forgiveness (which I am opposed to). If they repossess the house and write off the €100k shortfall after 3 years of debt settlement, that is an alternative to bankruptcy which I would call debt settlement and which I support.
If NAMA or the banks involved in Superquinn wrote down their loans from €400m to €200m , I would consider that debt forgiveness. But putting a company into receivership or a person into bankruptcy is not debt forgiveness.
It appears that in prepack recieverships, it is sometimes the same individuals who buy out the old business, leaving their historical debts behind, but this is not always the case. See http://en.wikipedia.org/wiki/Administration_(law)#Pre-pack_administrationIt is an interesting point about the prepack receivership. This is a UK term - I don't think we use it in Ireland. I think it usually means that the beneficial ownership retain beneficial ownership. That does not seem to be happening in this case.
I'm certainly not suggesting that it would be better to close down the business.The banks could have simply appointed a receiver who would have sold off the stock in a firesale and let the staff go while looking for a buyer for the properties. That would not have been in anyone's interests.
I suspect that they had discussions with all concerned beforehand to keep the retailing business going. It seems to me to be a good thing.
If the loans were secured on the properties, wouldn't this security hold through the recievership, i.e. those debts would still have to be cleared, or the new entity couldn't take ownership of the properties?We also have the Administration facility in Ireland whereby an Administrator could have been appointed and would have to get the court's approval for a scheme of arrangement. Not sure why this wasn't done. I suspect that the loans were secured on the properties so an administration might not have worked.
The new buyer will get to buy at a bargain price, as no time is given for open pricing on the market. They walk away with a debt-free bargain and the State picks up the tab.
True - we don't know what happened. However, there is every indication that the purpose of the recievership is to allow the new buyer to leave behind some or all of the property debt.I don't know the ins and outs of the deal but it sounds like this was the best deal for everyone involved. We don't know what the banks are left with. I can't imagine they agreed to write down €400m euro of debt for a fraction of the amount owed. Especially since there are non-nama banks involved and you would have to consider these to be very aggressive in recovering value.
Very true.What about the timing?
The receiver was appointed yesterday, and the receiver has sold the company today.
How has he had time to do due diligence on getting the best price? Surely the big companies., like Walmart or whatever can't have had time to put in a detailed bid in less than 24 hours.
So it appears, to me at least, that the receiver sold the company to the first bidder.. that would seem to be at odds with the requirement that he sells for the best price.
It appears as if Superquinn was not offered on the open international market... as that can't have been done in less than 24 hours. So what happens if in the future a firm claims that they would have made a better offer than the one which was accepted in lightning time?
But 'on the market' for an open sale by owners is very very different to 'on the market' for a sale by a reciever.Superquinn has been on the market unofficially for months. I would imagne Musgraves was the only/highest bid.
True - we don't know what happened. However, there is every indication that the purpose of the recievership is to allow the new buyer to leave behind some or all of the property debt.
Because they bought and paid for something worth 200M. Similarly to Brendan's post previously, reword your post as a house sale:OK, say Superquinn owes 400 million, but is only worth 200 million itself. So superquinn can be sold, for the 200m, and that is paid off the 400m owing.
Shouldn't the new owners have to pay the outstanding 200m? If not why not?
Because no distressed business would ever be sold.It's simple, the new owners should be liable for any debts owed by the company they have just bought... why should they be allowed to buy assets only, and not debts?
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