Eli5: How do CEOs from failing companies bail out with golden parachutes? Where does the money come from?
In: Economics
Failing is not dead. Chapter 7 bankruptcy is different than chapter 11.
Chapter 11 is a reorganization where the firm still runs in order to pay off debts.
The bond holders, whose debt it is, doesn’t want a clown show, or people actively sabotaging them. So they will pay the people at the top to do stuff they don’t want to do, like fire a bunch of people and take the blame for the failure, and in return, the people at the top agree to stay and not make things worse.
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