Specifically, who receives the donkey punch in this scenario:
i mean, they're talking about "shedding $800M debt". Who takes on that burden?
Specifically, who receives the donkey punch in this scenario:
i mean, they're talking about "shedding $800M debt". Who takes on that burden?
Here's the important part.
It comes on the heels of private acquisitions that have occurred over the last 15 years
The way I understand it is private firms borrow money to buy a company. They make payments but also suck the company dry. The banks already got their money back so when the bankruptcy happens they are cool with letting the rest go.
When did banks get their money back?
The ONLY reason to declare bankruptcy is to eliminate debt that you can't afford to carry. Basically, a judge decides what you pay, and you pay pennies on the dollar to each of your creditors.
The CREDITORS take the donkey punch. Probably in excess of $700 million.
But that's not the whole picture. The creditors count those losses as the cost of doing business, and add the amount to their overhead and markups. That means their good customers pay an increased premium to cover their loss on the E36 M3ty customers.
We all take it in the rear when a company declares bankruptcy through increased prices for goods, services, and borrowed money.
Before I started at this company they had issues.
Minnesota corporation tells vendors they will pay 50% of past due invoices when they open up as a Michigan corporation under new owners.
If they all agree to extend new terms to the new company and take half that will be the plan. If you disagree they will find a new vendor and your out 100% as they went bankrupt.
In the end the vendors took the burden.
Did a quick google search.
It looks like GC was a public company in '07 and got taken private by Bain Capital. Bain's main business model is a leveraged buy out (what Stampy is talking about)-buy a company with somebody else's money, then transfer the debt to that company and sell the whole thing for a profit. In this case 2008 happened and Bain didn't have enough lipstick to sell the pig. Instead Bain sold GC to Ares management in a debt for equity swap. GC's market has continued to E36 M3 the bed and here we are. Various investment firms (including Ares) will take the hit because they are the ones that loaned GC the money over the past few years.
SVreX (Forum Supporter) said:
We all take it in the rear when a company declares bankruptcy through increased prices for goods, services, and borrowed money.
The two groups who are going to get donkey punched are the workers at GC (if this involves downsizing/cost cutting) and the .01% investors who take part in the LBO/private equity markets. No, the credit markets won't be affected by this, and no, you're not going to pay more for good and services.
History and timeline: https://pitchbook.com/news/articles/this-day-in-buyout-history-deluged-by-debt-guitar-center-turns-to-ares
In reply to CrustyRedXpress (Forum Supporter) :
I'm not suggesting any credit market will be impacted directly.
I'm saying ALL businesses need to make money, or they will cease to exist. When Company A sells a product or service to Company B and fails to be compensated for it, Company A HAS to put the cost somewhere. It makes no difference whether that money comes from new investors, borrowed money, cuts in staffing, or other source. It STILL gets reflected in the cost of the services and products they offer.
It doesn't have to be complicated.
This seemed like a prettty informative vid I saw shortly after their bankruptcy was announced.
Support your local guitar store. 
When I worked as a salesman for a truck parts company that did a chapter 11, I was owed thousands of dollars in commissions and never got 1 cent of it. Employees get nothing that is owed to them.
In my experience, those who are owed a lot get a lot. Those with smaller claims get nothing.
In Chapter 11 (reorganization) secured creditors are first in line for whatever partial payments are negotiated after the filing. Unsecured creditors, including commission salesmen like Don and me, will never see a penny of what we are owed.
Nope, not an attorney nor did I stay at a Holiday Inn last night, but the wife is an attorney and has worked in the bankruptcy court as a clerk so I picked up some stuff over the years.
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