I’ve just seen that Mike Ashley (English businessman) has gone into administration with his company Go Outdoors, and has managed to just write off the debt and buy it back. How does it work? Surely the government are switched onto people doing this?
In: Economics
Company A owns company B and company B is full of debt. Company A lets company B go bankrupt, then buys it for an amount of money, and that money is used to pay its creditors. So people who owned debt of company B got the money.
The idea here is that JD sports didn’t want to lose this business but could not afford to keep it running with its current debt. So it basically went to the debt holders and told them that instead of burning more money and have a worse bankruptcy later, JD would give them some of the money they’re owed now, and in exchange they would get the business back.
I am not sure what about this makes it seem dodgy to you, could you explain?
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