Bankruptcies

[keith]

Here is one of Australia's run ins with asset stripping.

Bottom of the harbour tax avoidance

Bottom of the harbour tax avoidance was a form of tax avoidance used in Australia in the 1970s. Legislation made it a criminal offence in 1980. The practice came to symbolise the worst of variously contrived tax strategies from those times.

In its 1986/87 annual report, the Australian Taxation Office (ATO) stated a total 6,688 companies had been involved, involving revenue of between $500 million and $1 billion.

Operation

The operation at the heart of bottom of the harbour schemes involved a company that would be stripped of assets and accumulated profits before its tax fell due, leaving it then unable to pay.

Once assets were stripped, the company would be sent, metaphorically, to the "bottom of the harbour" by being transferred to someone of limited means and with little interest in its past activities. The company's records were often lost too. The ATO, being in the same position as other unsecured creditors in the case of an insolvent company, ended up with nothing.

More detail and history at the link.

[Reddog]

The great evil:

Asset Stripping

x 1000

I realize that this particular thread was about to expire. On “Last Week Tonight” with Jon Oliver this week there was an account of RL’s bankruptcy. Covered several aspects e.g. Shrimpfest, cheddar biscuits, Beyonce, asset stripping. I hadn’t paid much attention to the bankruptcy.
I believe we only went once, and my wife isn’t fond of seafood.

[MN-Skeptic]

Fairly long article on Gateway Pundit's bankruptcy -

Gateway Pundit Bankruptcy Is a 'Delay Tactic,' Election Workers Suing the Company Say

I'm only quoting a little here. Read the article for more.

Documents in the bankruptcy filing show that the Gateway Pundit does not have large debts. Its largest listed debt is to an anonymous “Jane Doe” for $16,546. Its second largest debt is $11,062 owed to Jez Morano, who is the husband of Jim Hoft, for “Telephone/Internet Services.” A filing from the end of May shows that the company has $2.32 million in assets against total debts of $102,596. It has $185,757 in cash in its bank accounts, $107,617 in one Charles Schwab investment account, $491,569 in another Charles Schwab investment account, and $497,511 in a 401(k). The company recently loaned Hoft $799,860 in connection with a condominium, and is says it expected to receive $150,000 to “The Justice League,” which is the group it is currently soliciting donations through.

In the three months before filing for bankruptcy, the company made a $17,280 payment to Hoft, a $33,186.17 payment to Hoft’s husband, and a $95,000 payment to The Justice League. The company also lists a 2021 Porsche worth $53,339 among its assets. It also lists among its assets the entirety of The Gateway Pundit’s website, which has published 140,000 articles and lists its value as “unknown.”

The company has just one shareholder and one employee: Jim Hoft. Its own documents show that it is cashflow positive and has been cashflow positive for quite some time. The documents show that Gateway Pundit relies on a network of contractors and freelancers to write and publish content on the website, and some of these contractors are listed as being owed money. But, in total, they are owed just a tiny fraction of what The Gateway Pundit has in the bank.

[northland10]

Isn't "The Justice League" GIL? Hoft paid The Justice League 95K and expects 150K? Good luck with that.

[raison de arizona]

Warren says it isn't the endless shrimp. And she's got a plan for that.

Don’t blame it on the endless shrimp.

Recently, Red Lobster declared bankruptcy, and even though it’s no laughing matter, the jokes practically wrote themselves—how could a company that offers endless shrimp NOT run out of money? But let’s look below the surface:

Red Lobster’s real downfall wasn’t endless shrimp—it was private equity’s endless greed.

You see, a private equity firm bought Red Lobster in 2014, & did their thing: looted profits, loaded Red Lobster up with debt, & saddled the restaurant chain with extra real-estate costs.

They followed a blood-sucking model that reaps rewards for private equity owners but leaves communities, workers, and customers holding the bag.

And private equity’s harmful effects go far, far beyond the restaurant industry—from retail stores to nursing homes to fisheries to manufactured housing communities to hospital systems (including Steward Health Care in Massachusetts).

Private equity should not be allowed to loot one business after another, and I have introduced the most comprehensive bill to overhaul the private equity industry.

My Stop Wall Street Looting Act would put private investment fund managers on the hook for the companies they control, end looting, empower workers and investors, and safeguard the markets from risky corporate debt.

But it’ll be an uphill battle to overcome the powerful interests who want to preserve a status quo that means big profits for them—even as stores get closed, consumers get cheated, workers get laid off, and pensions get raided.

Read more about my Stop Wall Street Looting Act, and sign on as a grassroots co-sponsor to say you’re in this fight to stop private equity from ransacking our economy:

https://x.com/ewarren/status/1800304603738653093

[raison de arizona]