Sony's chances of going bankrupt in the next two years

[Dodece]

@HappySqurriel

With damned good reason might I add. When companies generate new stock. It stands to reason that it devalues their current stock. All the company is doing by offering up stock in lieu of payment is forcing the investors to take the financial hit instead of the company itself. That undermines investor faith in the company, and drives down the price of the stock. Which forces the company to offer up more stock in compensation. Which drives the stock down further. This kind of a cycle can escalate fast, and get out of control even faster.

Once the investors panic about the swaps. It won't take them long to use the legal and institutional mechanisms to actually force the company into a bankruptcy. Your scheme wouldn't promote longevity it speeds the company into a bankruptcy that can well be avoided. Did you see what happened with Sony offered its stock option bonds a few months back. Their stock took a big hit, and those were just options. If Sony did that again in less then a year. You can bet your ass there would be a run on the stock, and legal requests for injunctions against the companies management would be filed shortly there after.

The reason schemes like this work in bankruptcy is pretty simple. Most of the time the existing stock has become worthless. So the stockholders have already lost. In most cases they either don't get anything, or they get pennies. These stock equities you are talking about are just a way for creditors to divvy up the company they now own. So they can sell off their stakes later, or as a way to manage the liquidation. I mean the new companies business could just be selling itself off piece by piece.