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<blockquote data-quote="SportsThoughts" data-source="post: 30671" data-attributes="member: 2221"><p>The Hertz case is very interesting. A great moral dilemma arises from this. Should a company controlled by creditors post Chapter 11 filing, be able to issue more equity in order to raise capital? (I'm aware the SEC pulled the plug but consider it anyway)</p><p></p><p>In this case it's quite clear from the Hertz books that if you were to liquidate the assets they'd still be in something like 1.6bn USD in the red. BUT because of the whole 'bro investors' (no offence intended for those that consider themselves bros) movement replacing sports gambling during covid, you have a pool of investors who might very well purchase the newly issued equity.</p><p></p><p>This means that upon the distribution of assets when the company is wound up, the creditors have diluted some of their losses at the expense of those who don't understand what they've purchased. How is that fair?</p><p></p><p>According to some noble prize winning economists, applying the Efficient Market Hypothesis means there is a bigger than 0% chance that Hertz might still come out of Chapter 11 and make those 'bros' a bloody fortune!</p></blockquote><p></p>
[QUOTE="SportsThoughts, post: 30671, member: 2221"] The Hertz case is very interesting. A great moral dilemma arises from this. Should a company controlled by creditors post Chapter 11 filing, be able to issue more equity in order to raise capital? (I'm aware the SEC pulled the plug but consider it anyway) In this case it's quite clear from the Hertz books that if you were to liquidate the assets they'd still be in something like 1.6bn USD in the red. BUT because of the whole 'bro investors' (no offence intended for those that consider themselves bros) movement replacing sports gambling during covid, you have a pool of investors who might very well purchase the newly issued equity. This means that upon the distribution of assets when the company is wound up, the creditors have diluted some of their losses at the expense of those who don't understand what they've purchased. How is that fair? According to some noble prize winning economists, applying the Efficient Market Hypothesis means there is a bigger than 0% chance that Hertz might still come out of Chapter 11 and make those 'bros' a bloody fortune! [/QUOTE]
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