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Originally Posted by Cecil Terwilliger
I don't think anyone is concerned with the semantics of it.
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This isn't semantics. It's really frustrating how people around here seem not to care at all about the details, even when they're important. It's probably just people in general, really, and CP is probably no worse (and possibly better, depressingly) than the general public but you can't just wave away stuff like that.
She doesn't owe these people any money. The company does. The company has no money to pay them.
A person and a person's company are two completely different entities. That's one of the
main reasons that companies exist in the first place - to incentivize people to engage in business ventures by creating a structure where you can try to make a successful business, and if it doesn't work, you don't end up losing your house. If I have venture capital, I can fund two separate startup businesses, and if one of them doesn't work out, I can rest assured that the other will be able to go forward without disruption. I'm therefore far more likely to start both businesses.
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The fact of the matter is that it is bad optics to leave unpaid employees. If she's got enough personal resources to start a new business that presumably costs 10s of thousands of dollars (if not hundreds), the nice thing to do would be to make those employees whole by forking over a couple of grand.
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The "nice" thing to do? I guess... why not take that money and give it to the United Way, or doctors without borders? That would be nice.
Bankruptcy laws weren't drafted at random. There are deliberate policy choices made to balance the protection of creditors with the goals of the market. Claims for unpaid employee wages in bankruptcy get very, very high priority, whether it's a BAA process or a CCAA process. They certainly outrank shareholders; if they didn't get paid, then once this company filed for bankruptcy (or CCAA protection), I can pretty much guarantee that Beaton and any other equity investors got zero dollars out of it. The problem is that secured creditors still come first, and even they tend to get pennies on the dollar... there's often not much pie left for anyone else. That's a failed business.
If we wanted, we could make sure that every employee and creditor gets paid very easily - just pass a law that sends debtors, or the primary shareholder of a debtor company, to prison for not paying their debts. Problem solved! Wait, do you suppose that might discourage people from investing in private companies and starting businesses in the first place, thereby creating the jobs that created the debt these employees want to recover? Would it maybe stop people from buying shares in
anything, if they could lose not only the money they invested but all the money in their bank account as well?
Now, if she just told everyone that she filed for bankruptcy and instead just absconded with a bunch of cash, then yeah, that's both illegal and criminal. Doesn't sound like it, though.