this post was submitted on 23 Jul 2023
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No, the reason it’s not going to break him is that Twitter took on the loan, not himself.
Hold on…. You’re saying I can take out a loan for $x amount of dollars against a company I don’t own yet and buy it with that money?
if I take out a mortgage for a property before I buy it and I destroy the house; the bank still comes after me for the value.
Am I being stupid or is the game more rigged than I thought?
Yes
Not the same, a house can't be a legal person, the owner is the legal person of the house. The money Musk borrowed in twitter is owed by twitter, not by Musk. To do the same with a house, you need to do it through a company.
That is possible because companies can have limited financial responsibility, meaning the money they owe are not owed by their owners.
It's a pretty nifty arrangement, to help the rich stay rich no matter what happens.
We are stupid for not being rich enough, and still allowing the rich unfair advantages.
There's a type of insurance for everything.
Only if it was destroyed intentionally.
Of course, it could be argued that Musk is destroying Twitter intentionally, but that's for a court to decide.
That's what bankruptcy is for. Twitter files bankruptcy, and they can officially tell the banks to stuff it.
Not quite. The the $33 Billion of equity Elon Musk put up junior to the $13 Billion loan.
That means that if the company starts at $44 Billion then falls to $15 Billion, then Twitter still owes $13 Billion, but Elon Musk only has $2 Billion now.
Leveraged buyouts are... well... levered. It grossly increases the risk of losing everything.