Looting: The Economic Underworld of Bankruptcy for Profit

This is very interesting.<p>I think it's also worth pointing out that the data tends to show that the use of <i>personal bankruptcy</i> to game the system is actually very low.<p>I find that when the subject is brought up in a political context, this distinction is often not made.<p>Here is a great lecture from Elizabeth Warren on the subject: <a href="http://www.youtube.com/watch?v=akVL7QY0S8A" rel="nofollow">http://www.youtube.com/watch?v=akVL7QY0S8A</a>

Another interesting thing to note about profit coming from bankruptcy is the Legal and Banking/Restructuring fees. The restructuring advisors both on the legal and financial side get massive fees from bankruptcy advising (negotiating debt settlements and post-bankruptcy cap structure, and other things like that) and these fees are prioritized over even the most senior liens of debt. These fees can literally be 1-15% of the total debt of the distressed company.

I probably should have posted the link to Tim O'Reilly's Google+ post: <a href="https://plus.google.com/107033731246200681024/posts/YCFhTbmfXC9" rel="nofollow">https://plus.google.com/107033731246200681024/posts/YCFhTbmf...</a>

I live in Rochester NY, home of Eastman Kodak which is going through a bankruptcy, and looks like it may be coming out of it (probably will go back in it or get sold in my opinion).<p>I an not suggesting that Kodak's downfalls was due to management looting the company but we do see evidence of upper management grabbing all they can get. Just recently upper management asked for millions of dollars of bonuses (earmarked for upper management only) if Kodak successfully pays off its creditors. Bonuses use to be rewarded for turning a profit, apparently now you get rewarded for just paying your bills.

It's not really an underworld if it happens completely out in the open, is it?