If Mike Ashley owns 30% of the business then 30% of the debt is owed to him? or is that ignorant and not how it works? Therefore him paying £200 million in plus his additional 30% owed to him (156 million to be precise) is 356 million. leaves £164 million the other investors will lose out on.
debenhams goes into admin
- Thread starter chrcoluk
- Start date
If Mike Ashley owns 30% of the business then 30% of the debt is owed to him? or is that ignorant and not how it works? Therefore him paying £200 million in plus his additional 30% owed to him (156 million to be precise) is 356 million. leaves £164 million the other investors will lose out on.
That’s not how it works, it’s a limited company that is publicly traded. The company is its own person and it owns the debt.
He owns 30% of the shares, the shareholders are investors who give money for a share of the business and a return on their investment. The shareholders are the last people to be paid, they should get the highest return over most other forms of capital but it also comes with the highest risk. If there are any problems you get nothing or if the business performs poorly your investment is worth less. You can only normally get your investment out by selling it to someone else. The business doesn’t owe any money to shareholders and they are also not liable for any debt (hence limited liability).
Once a company is wound up any money left over is shared between shareholders after all other creditors have been paid. Trading companies only normally get wound up when their liabilities are greater than their assets (insolvent) and this after administrators have been paid there is normally nothing left.
Most investors have few shares in lots of companies to mitigate against the risk.
Creditors are people who the business owns money to, this can be a loan, overdraft, money owed for stock, tax bill etc. Creditors are higher up the food chain than shareholders.
He owns 30% of the shares, the shareholders are investors who give money for a share of the business and a return on their investment. The shareholders are the last people to be paid, they should get the highest return over most other forms of capital but it also comes with the highest risk. If there are any problems you get nothing or if the business performs poorly your investment is worth less. You can only normally get your investment out by selling it to someone else. The business doesn’t owe any money to shareholders and they are also not liable for any debt (hence limited liability).
Once a company is wound up any money left over is shared between shareholders after all other creditors have been paid. Trading companies only normally get wound up when their liabilities are greater than their assets (insolvent) and this after administrators have been paid there is normally nothing left.
Most investors have few shares in lots of companies to mitigate against the risk.
Creditors are people who the business owns money to, this can be a loan, overdraft, money owed for stock, tax bill etc. Creditors are higher up the food chain than shareholders.
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100% of the debt is owed to the persons who lent the money.
Soldato
Nope. People with gift cards are unsecured creditors. It's the same if you place (and pay for) an order one day and the company goes into administration the next day.
No, that's not really how that works either. A gift card is a liability on the balance sheet, holders of gift cards are all essentially creditors. When a company goes into administration its assets and liabilities are essentially frozen while the administrators try and see if the business can continue as a going concern or its wound up.
If a company comes out of administration it's debt's can be wiped clean and is effectively a new entity. The gift card relates to the previous 'version' of the company and therefore isn't valid anymore. Holders of gift cards have to join the queue with all the other creditors as the old company owes you £XX to the value of the card. The chances are you will get nothing becuase your debt is so small compared to the rent owed, HMRC etc. Also to get any money back you have to register your debt with the administrators because they will not know who you are, most don't bother doing this which is another reason they get nothing.
If a company comes out of administration and a part of that deal is they take on the debt, normally the card is still valid.