Responsible ancestors gave advice to future generations based on experience that included the baby, the bathwater, and the kitchen sink.
An idea put forth in jest by thinkers in capital markets, adopted by lawyers in an application before a bankruptcy court judge, and granted by a judge for a debtor, a company in bankruptcy proceedings, to sell unissued shares to the public has changed that.
The thinkers thought their idea would be understood satire.
A debtor applies for bankruptcy because it can not pay its bills from interest on monies borrowed to the entire supply chain. Those that shared the risk of the business model, the shareholders, lose everything because the shares are extinguished. In theory after the creditors, lenders to the business model, reach an agreement that the court approves, new shares are issued to the creditors for a new business model and the old shareholders receive nothing. Simply, the rumor that a company may file a bankruptcy petition is enough to drive the price of the shares to the zero bound as the baby is thrown out with the bathwater and the kitchen sink.
But this was before the establishment in 2020 of the Central Bank of Robin Hood, a term to describe the next generation of young investors with digital experience, short attention spans, a healthy disrespect for authority, and over $1 trillion of funding from the Federal Reserve authorship of stimulus checks.
Before the Lehman moment of 2008, the entire Federal Reserve balance sheet was under $100 billion, it now stands at close to $8 trillion holding risks that were handicapped by now-bankrupt elevated thinkers. In one legislative act the Central Bank of Robinhood has been capitalized with an amount of ten times more than the Fed balance sheet from 2008.
The Hertz Corporation announced its bankruptcy filing, the stock dropped below one dollar, and the number of Robin Hood accounts that thought Hertz was a good investment went from 20,000 to 160,000 and the price increased ten times.
The thinkers thought this funny and wrote about it. The underwriters looked at the Hertz balance sheet and saw unissued shares, the lawyers applied to the court with a small discussion of whether the unissued shares were company property because they were unissued, observed that the monies raised would not have to be returned making the choice better than other financings that would be, and the court permitted the sale. The money that could be raised from the offering was one billion dollars and at 3% of the proceeds the underwriter stood to make $30 million from folly.
The court agreed that a stock that will be worthless can be sold to the public as long as the public is willing to pay.
Yes, the Baby, the Bathwater, and the Kitchen Sink Offer are now part of the capital market dictionary.
An idea put forth in jest by thinkers in capital markets, adopted by lawyers in an application before a bankruptcy court judge, and granted by a judge for a debtor, a company in bankruptcy proceedings, to sell unissued shares to the public has changed that.
The thinkers thought their idea would be understood satire.
A debtor applies for bankruptcy because it can not pay its bills from interest on monies borrowed to the entire supply chain. Those that shared the risk of the business model, the shareholders, lose everything because the shares are extinguished. In theory after the creditors, lenders to the business model, reach an agreement that the court approves, new shares are issued to the creditors for a new business model and the old shareholders receive nothing. Simply, the rumor that a company may file a bankruptcy petition is enough to drive the price of the shares to the zero bound as the baby is thrown out with the bathwater and the kitchen sink.
But this was before the establishment in 2020 of the Central Bank of Robin Hood, a term to describe the next generation of young investors with digital experience, short attention spans, a healthy disrespect for authority, and over $1 trillion of funding from the Federal Reserve authorship of stimulus checks.
Before the Lehman moment of 2008, the entire Federal Reserve balance sheet was under $100 billion, it now stands at close to $8 trillion holding risks that were handicapped by now-bankrupt elevated thinkers. In one legislative act the Central Bank of Robinhood has been capitalized with an amount of ten times more than the Fed balance sheet from 2008.
The Hertz Corporation announced its bankruptcy filing, the stock dropped below one dollar, and the number of Robin Hood accounts that thought Hertz was a good investment went from 20,000 to 160,000 and the price increased ten times.
The thinkers thought this funny and wrote about it. The underwriters looked at the Hertz balance sheet and saw unissued shares, the lawyers applied to the court with a small discussion of whether the unissued shares were company property because they were unissued, observed that the monies raised would not have to be returned making the choice better than other financings that would be, and the court permitted the sale. The money that could be raised from the offering was one billion dollars and at 3% of the proceeds the underwriter stood to make $30 million from folly.
The Debtors are authorized, but not required, to sell shares of the common stock
of Debtor Hertz Global Holdings, Inc. through at-the-market transactions using the existing shelf
registration statement on Form S-3 (File No. 333-231878) previously filed by Hertz with the
U.S. Securities and Exchange Commission and declared effective on June 12, 2019, for an
aggregate offering amount of up to and including to $1,000,000,000, which in no event will
result in the issuance of more than 246,775,008 shares
The court agreed that a stock that will be worthless can be sold to the public as long as the public is willing to pay.
Yes, the Baby, the Bathwater, and the Kitchen Sink Offer are now part of the capital market dictionary.
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