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Comment on Judge Rejects Sale of Infowars to The Onion

SkaveRat@discuss.tchncs.de ⁨3⁩ ⁨weeks⁩ ago

Judge Lopez said that the bankruptcy auction failed to maximize the amount of money that the sale of Infowars should provide to Mr. Jones’s creditors, including the Sandy Hook families, in part because the bids were submitted in secret.

“It seemed doomed almost from the moment they decided to go to a sealed bid,” Judge Lopez said. “Nobody knows what anybody else is bidding,” he added.

So the problem is that it didn’t maximise the potential income for the bankrupcy case?

Shouldn’t that be a “oh well, sucks. but a sale is a sale” problem?

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JasonDJ@lemmy.zip ⁨3⁩ ⁨weeks⁩ ago
The market decided.

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- intensely_human@lemm.ee ⁨3⁩ ⁨weeks⁩ ago
  The market did not decide, given the bids were secret.
  
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  - ricecake@sh.itjust.works ⁨3⁩ ⁨weeks⁩ ago
    No, that’s actually still the market deciding. It’s a perfectly standard type of auction that discourages low-ball bids. Bidding is secret, you only get one bid, and you don’t know who or if anyone else is bidding.
    If you want it, you make your best offer for what you’re willing to pay for it, and if someone else bid more they get it. If you would have been willing to pay more with more rounds of bidding, you should have bid that from the start.
    
    Open-bid auctions get better prices for sellers when there are a lot of bidders, and better prices for buyers when there are few. Given there were two bidders, it’s fair to seek the most either party will bid, rather than seeking $1 more than the maximum the loosing party will pay.
    
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sol@lemm.ee ⁨3⁩ ⁨weeks⁩ ago

Shouldn’t that be a “oh well, sucks. but a sale is a sale” problem?

“A sale is a sale” works fine when both sides to the transaction are well-informed and acting for themselves. When you are selling assets for someone else’s benefit, you generally have extra obligations to them, because otherwise you don’t really have an incentive to achieve a good price. So courts do generally have some oversight over sale of the assets of a bankrupt estate, to ensure that the trustee is not short-changing creditors just to get the job done quickly.

A complicating factor here is that the Sandy Hook families (who as far as I know are the large majority of the creditors) also supported the sale.

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- RobotToaster@mander.xyz ⁨3⁩ ⁨weeks⁩ ago
  
  A complicating factor here is that the Sandy Hook families (who as far as I know are the large majority of the creditors) also supported the sale.
  
  I assume there are other creditors who didn’t?
  
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ricecake@sh.itjust.works ⁨3⁩ ⁨weeks⁩ ago
So it’s unfortunately not actually a sale until the judge approves it, it’s just an accepted bid.
Sorta like when buying a car. The salesman tells you the price for the vehicle, overpriced perks, and how much your trade in is worth, and you accept the final price. Then the salesman has to get the floor manager to agree, which they always do, because they’re the ones with authority to approve the sale. Then you can sign the paperwork and exchange money and you’ve actually processed the sale. Until then either party can walk away for any reason.

In this case, it’s like the floor manager rejected the sale because the cash part of the sale price was less than MSRP, and they didn’t think the trade in value mattered.
It’s not common for the sale to get rejected, and it’s even weirder for them to reject “not cash” instead of paying attention to value.

The judge saying the estate can’t accept debt forgiveness in lieu of cash is just odd, since it reduces the debt more than the cash would.

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n3m37h@sh.itjust.works ⁨3⁩ ⁨weeks⁩ ago
Follow the money

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disguy_ovahea@lemmy.world ⁨3⁩ ⁨weeks⁩ ago
It’s up to the lender to accept the settlement. They’re the ones taking the loss.

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danc4498@lemmy.world ⁨3⁩ ⁨weeks⁩ ago
Whatever gets the sandy hook families the money they deserve.

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- spankmonkey@lemmy.world ⁨3⁩ ⁨weeks⁩ ago
  They wanted the sale to go to the Onion and not some conservative the group more than the money. They were fully on board with taking the lower amount.
  
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  - Lifecoach5000@lemmy.world ⁨3⁩ ⁨weeks⁩ ago
    There’s a legal eagle vid that explains the math:
    
    youtu.be/GmDNz7irGgw?si=U3u-_vcJESrMLVdQ
    
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  - danc4498@lemmy.world ⁨3⁩ ⁨weeks⁩ ago
    I’m no lawyer, but is that how these things work? The state is selling the company to pay a debt. The family owns the debt, not the company. They don’t get to decide how much value gets generated from the sale of the company. So it’s the states duty to maximize the proceeds.
    
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    ricecake@sh.itjust.works ⁨3⁩ ⁨weeks⁩ ago
    The estate has a duty to maximize the value of the liquidation, and pay back creditors as best it can. Specifically to settle the debts.
    
    While a creditor can’t dictate the value of the estate, they can offer to forgive debt, which is the same for the purposes of the estate.
    
    If the cancelled debt would have been worth more than the cash, then the creditors would be rightfully furious if the state instead sold the asset for less cash and paid them that way.
    
    If you owe me $50k, and I tell you your watch is worth $5k to me, and instead you sell it for $250 and give me that while declaring bankruptcy so I don’t get anything else, that’s a terrible outcome for me, and great for you if you sold the watch to your friend who then gave it back to you in exchange for $250 later.
    
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    spankmonkey@lemmy.world ⁨3⁩ ⁨weeks⁩ ago
    Yes, it is more complicated than just money.
    
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