> How about we not let them declare bankruptcy and send them to corporate debter's prison instead: hold them accountable by garnishing future earnings until their debts are accounted for. Essentially let them continue operating but let them hang out in the pink sheets for a decade or so as punishment.
The purpose of bankruptcy is to determine how to proceed when a company's liabilities exceed its assets. The company had $10B in assets and $7B in liabilities, a fine added another $5B to their liabilities, now they're bankrupt. Not all creditors can be paid the amount they're owed. Bankruptcy laws exist to make sure what happens next is fair, e.g. each creditor gets 75c on the dollar instead of having the CEO pay all the debts owed to his brother's company first and leaving the other creditors with nothing.
In practice what usually happens in a case like that is that the company files for bankruptcy, sells all its assets --including its name -- to a new corporation that continues operating its business, and the proceeds from the sale are used to satisfy the old corporation's liabilities as much as possible.
Assuming the sale price is fair market value, there is no way to extract any more money from the company than that -- that's what fair market value means. You can't get any more money by forcing them to continue operating. Their future profits are built into the price of what you can sell their operations for. If that amount is less than what they owe, there is nowhere for the rest of the money to come from.
Well, you could eliminate limited liability and go after the shareholders, but if that's the intention then it shouldn't be done ex post facto.
The purpose of bankruptcy is to determine how to proceed when a company's liabilities exceed its assets. The company had $10B in assets and $7B in liabilities, a fine added another $5B to their liabilities, now they're bankrupt. Not all creditors can be paid the amount they're owed. Bankruptcy laws exist to make sure what happens next is fair, e.g. each creditor gets 75c on the dollar instead of having the CEO pay all the debts owed to his brother's company first and leaving the other creditors with nothing.
In practice what usually happens in a case like that is that the company files for bankruptcy, sells all its assets --including its name -- to a new corporation that continues operating its business, and the proceeds from the sale are used to satisfy the old corporation's liabilities as much as possible.
Assuming the sale price is fair market value, there is no way to extract any more money from the company than that -- that's what fair market value means. You can't get any more money by forcing them to continue operating. Their future profits are built into the price of what you can sell their operations for. If that amount is less than what they owe, there is nowhere for the rest of the money to come from.
Well, you could eliminate limited liability and go after the shareholders, but if that's the intention then it shouldn't be done ex post facto.