What does pennies on the dollar mean?

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I have always heard it in movies but they move on too fast for me to process it.

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Anonymous 0 Comments

Imagine a company goes bankrupt. The creditors (usually a bank) receive all its assets in part-payment of the debt.

The bank now has all this stuff (maybe buildings, inventory, patents) but wants money. So they sell them.

Usually they can’t get what they’re worth so they get a fraction of it (pennies on the dollar).

Another option is a business goes into some form of bankruptcy protection (in the UK its called administration). The administrator tries to negotiate with the creditors to accept way less than they’re owed – as the alternative is getting nothing when the business collapses. Again, pennies on the dollar of what they’re owed – but something is usually preferable to nothing.

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