By Tyler Durden | 4 August 2020
ZERO HEDGE — By now everyone knows that one fifth of LL corporations are “zombies” — companies that should be out of business as they are technically insolvent and don’t even generate enough cash flow to meet their debt obligations, but continue to exist thanks to either record low rates which allow them to issue even more debt and use the proceeds to pay for existing interest expense (and roll over debt maturities), or government handouts which perpetuate their pathetic, deflationary existence.
But did you know that there are now reincarnated zombies: companies which were in such a dire state they did file for bankruptcy despite the Fed’s unprecedented monetary generosity … and yet shortly after they “unfiled” just so they would be eligible for government “stimulus”?
As Bloomberg’s Steven Church puts it, say your business needs a bailout from the federal Paycheck Protection Program, but you’ve already gone bankrupt, making your firm ineligible. Tough luck, right? Well, maybe not. […]
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