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In reply to the discussion: Indicting Mitt Romney is nearly impossible - now [View all]Xolodno
(7,291 posts)Law, that he and his compatriots helped get passed to protect him and his compatriots.
The "corporate raiders" of the 80's trying to kill Disneyland...sure they killed plenty more...however, going to that level, brought some legislation to protect corporate-hood. But companies like Bain, found another avenue, granted it wasn't as fast, but they saw a way where they could leech off of the corporations bank account. Companies like toy stores, have to have a moving inventory...thus a constant cash pile that moves quite fluidly. Sell inventory, buy inventory. Use some of the profits to upgrade. Sure they have credit, but that costs more and cuts into profit. Best to have a pile of cash to avoid that. Hey, whats better than an interest rate of 0% on lending?
Capital companies rob them of that ability with a quick infusion of cash...the company is "temporary" thankful for a cash shortage, but, in the end, realize, they made a major mistake. If you are a CEO, capital companies are not your friend. They are not interested in what return they could get in percentages of single digits......but what they can get in loans in double digits...after taking in that profit...capitalize in the sale of assets. You can bet your sweet ass, they know the exact percentage to loan a company and still "lose" on the loan...while having the option to break even on sale of assets.
With that said, Kay-bee toys has been making a resurgence...slowly, but via a company that buys "worthless" defunct company names and ventures to see it they can make a resurgence. With the "Toy's R Us" return, via a capital company, they probably realized they could make a profit of it both dead, and resurrected. They'll make a profit on the sale and walk away....unless of course, they think they can make a profit of their legal scam again.
Side note, why don't leeches like Bain go after companies like insurance companies who are required to carry lakes of cash on hand? Because they are required to carry lakes of cash and invest it in safe investments. Sure they can borrow when their reserves don't line up..but its limited and under the scorn to "get it together". Because at the end of the day, the state doesn't want to pay for bad or greedy decisions that cost its taxpayers....its a politically costly job.