| HappySqurriel said: The real problem Sony faces is that their net liabilities are at $140 Billion, their net icome is at -$5 Billion, and their debt to equity ratio is at 83% ... At the current rate, in the not too distant future (2 to 3 years) Sony will have a book value of $0. There best option is to file for chapter 11, convince debt holders to take a haircut (probably resulting in liabilities being reduced by 50% to 75%) by diluting shareholder equity, and to restructure the company to return to profitability. |
That would take a incredible amount of convincing. Creditors aren't obliged to forgive their debts, and they cannot be forced to forgive them. Further more as the situation stands now there isn't even a reason as to why they should do such a thing, because they can indeed be paid in full with the interest that they were in fact promised. Sony is just a liquidation away from making good, and the company doesn't even have to liquidate all of its assets. Most of their assets yes, but that still doesn't mean that there wouldn't be a viable business on the other side.
The problem is that no entity can claim bankruptcy until they are bankrupt. As in imminent danger of defaulting on debts. Given Sony's cash reserves they are in a postition to be able to make their payments for the next few years, and if they do something really smart like abandon their television manufacturing business. Which depletes those reserves at a staggering rate. They could easily last twice as long as that. Even losing a billion plus dollars a year. Anyway any attempt by Sony to claim bankruptcy given their cash reserves would actually kickstart a liquidation.The creditors would recall their loans, and petition the courts to see that they got full restitution.
You see the creditors would see it as a tacit admission on the part of Sony that they have been cooking their books. Not just recently, but for a very long time, and they will no longer have any faith in the accounting. At that point there wouldn't be any saving the company. Investors would start to dump their stocks. Management would be under criminal investigation. Lending institutions in other locations would petition their local governments to seize Sony's local assets. It would just turn into a collosal cluster fuck, and in the midst of that the company would cease operations. Anytime a company drops a bombshell likes this that is totally counter indicated. Everyone knows that it is a sign of the end.
The point I am driving home is that it isn't even a option. If the management wants to keep themselves employeed, and out of prison they would be out of their fucking minds to try something like what you suggest. Firstly the court would hire a outside administrator to oversee the company, and to audit the companies books. Secondly the court would issue warrants for the arrests for key members of management. Be it cooking the books, or stock manipulation. Someone is very guilty of a felony. That isn't to say that they won't be charged, and convicted in absentia, because if I were to pull such a deranged stunt. I would prefer to be somewhere that extradition laws didn't reach.
Anyway your plan doesn't work. Sony is in bad shape, but it is more like a temporary or chronic condition. Then a sudden illness that requires immediate critical care for the patient to have any chance of survival. It is more like a case of Bronchitus. Rather then a case of meningitus. You might treat the latter with cold water immersion if the patient had a terribly high fever, because that fever could kill them. While it isn't all that good for the Meningitus suffer. It is better then the alternative. The only thing doing that to a Bronchitus suffer will accomplish is to exacerbate their current condition, and cause it to progress to full blown pnemonia which can kill them. Your cure is worse then the disease. Especially when the disease could remedy itself over the coarse of time.
My point is that bankruptcies aren't good medicine. They are like the last resort when everything else has failed. Imagine going into a operating theater with a surgeon that works with a chainsaw, and has a ten percent success rate. Most companies that file for reconstruction die on the table, and most who actually survive the trauma succumb in a few more years anyway. Only a special few actually go on to have a future. Why wouldn't any rational entity go through all of the other treatments that have better success rates first.
