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Originally Posted by CorsiHockeyLeague
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.
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.
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I hate to jump on the bandwagon but your post is so CHL of you. Take semantics that I addressed and write an essay on the semantics.
No one cares if this is legal. No one cares if it is smart or shrewd.
Fact of the matter is she owned and operated a company that didn't make good on its promises to its employees. Separate legal entity or not, not paying these people was a crappy thing to do if she had enough money to start a new business.
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Originally Posted by nik-
Legal or not, she looks awful doing this and deserves any criticism.
This isn't the United Way, those people provided her services and she used corporate distinction to screw them.
I'm assuming her new place will fail too.
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Precisely.
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Originally Posted by Shazam
You're conflating two things: Money needed to start a company and ownership.
Yeah, she owns 50% of the new company. But you hardly need any money to do this. They probably did what everybody else does - say, 1000 shares at $1 each and so she spent $500 on her portion of the shares.
She probably has dick for free cash right now, so it's the other investors that plowed in seed money.
With that there's probably some conditions on her, like if she ####s this up everybody gets to chop off a finger.
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No I'm not conflating anything. Starting a corporation doesn't cost that much money and I never said it did.
But starting a new restaurant costs money. You have to buy goods, hire staff etc. That stuff isn't free.
And even if she has other investors, I don't really care. The optics of the situation is that she has money but let her old business (which legally is separate, but really is hers and represented by her) screw over people.
Is it possible she's in financial trouble personally and can't afford to pay those people? Possibly. But the optics of starting a new business just look bad.