Eli5: How an individual take a loan to buy a company, and have the purchased company responsible for paying back the interest?

Question

Can the company also be made responsible to pay back the loan itself, as well as the interest?

In: 19

Answer 1

I believe it’s called a “leveraged buyout.” Same thing that killed Toys R Us. On the surface it’s nonsense: you make a company take out a loan to buy itself. On a deeper level it’s also nonsense but the company’s shareholders get to walk away with a big chunk of cash from the buyout while the company burns behind them.