RE: i have mixed feelings27 Feb 2016 11:08
goodluck,
i'm honestly not sure if you're actually being serious
in your posts this morning or just joking. but working
on the basis that you not just on the wind-up, the
key difference to understand is between **secured
versus unsecured lending**. if epsilon's loan to DAN
was unsecured and company goes bust, epsilon
lose their money. but if the loan is secured on e.g.
property owned by DAN, and DAN go bust, the
lender would get their money back because they
get the property asset. that's what it means to
have a charge over an asset or assets as security.
obviously, lenders tend to charge a lot more
on unsecured loans because they are much
riskier for the lender in case of default.
as regards whether a company is worthless --- note
that the overall value of a company is the total sum
of both its assets and liabilities & debts. so a company
might indeed be worthless overall, but nonetheless contain
within it various assets that are actually quite valuable in
their own right. so if DAN goes down the tubes because
crushed by debt with not enough new cash coming in,
there could still be some nice assets left on the corpse that
epsilon or others would like to pick off after DAN's demise.
the above comments offered seriously,
just in case you are not simply on wind-up.