Bloomberg Law
Jan. 31, 2023, 7:27 PM

Matt Levine’s Money Stuff: The J&J Bankruptcy Didn’t Work

Matt Levine


The basic idea of bankruptcy is that if you have a company with $1,000 of assets and $2,000 of liabilities, you can’t pay back everyone everything you owe them. You could just pay back the first creditors who show up and ask for their money back, until the $1,000 is gone, and then give the remaining creditors zero, but that seems unfair and probably destroys value. So the bankruptcy system says, essentially, that you get all the creditors together and give them all 50 cents on the dollar. There are tons of nuances to this — about timing, about seniority, ...

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