@Kirindrinker, you're exactly right. I love when people in the public (i.e., this caller) start opining about issues they have no clue on. First, if the bondholders lost, well that's the risk they take in owning a bond. Second, bondholders have higher seniority on the capital structure than other investors, particularly the stockholders. So, if the company goes into bankruptcy, the bondholder depending on the type of bond, is typically higher in line than a stockholder.
This is a little over my head. I am not well-versed in business practices. Can you help clear this up for me, kirindrinker? You may know this better than me. What is the difference between taking a fee out of gross earnings (can't really call it profit since profit is earnings minus costs) and taking fees from net profits? Also, do firms like Bain have a fiduciary responsibility to the bondholders not to sell off the company if it is going to fail?
@Stallkyr There is no way to take a fee from a net profit. A net profit is capital acquired after the burden of debt has been satisfied. All fee's are a business expense taken/deducted from a gross income.
When a company like Bains purchases a failing company the bond holders are also compensated per agreement. Just like when the government bailed out GM, the stock holders were compensated. Not as much as they would like to have been, but were compensated
@Kirindrinker, you're exactly right. I love when people in the public (i.e., this caller) start opining about issues they have no clue on. First, if the bondholders lost, well that's the risk they take in owning a bond. Second, bondholders have higher seniority on the capital structure than other investors, particularly the stockholders. So, if the company goes into bankruptcy, the bondholder depending on the type of bond, is typically higher in line than a stockholder.
mbukow01 1 month ago
This is a little over my head. I am not well-versed in business practices. Can you help clear this up for me, kirindrinker? You may know this better than me. What is the difference between taking a fee out of gross earnings (can't really call it profit since profit is earnings minus costs) and taking fees from net profits? Also, do firms like Bain have a fiduciary responsibility to the bondholders not to sell off the company if it is going to fail?
Stallkyr 1 month ago
@Stallkyr There is no way to take a fee from a net profit. A net profit is capital acquired after the burden of debt has been satisfied. All fee's are a business expense taken/deducted from a gross income.
When a company like Bains purchases a failing company the bond holders are also compensated per agreement. Just like when the government bailed out GM, the stock holders were compensated. Not as much as they would like to have been, but were compensated
kirindrinker 1 month ago