Matt Levine’s Money Stuff: The Onion Can’t Buy Infowars Yet (Correct)

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Sometimes a company owes its creditors more money than it can pay them, so it files for bankruptcy. Loosely speaking, bankruptcy means that the creditors own the company, and a bankruptcy court works out the best way to get them as much value as possible. Often this means running an auction for the company’s assets.

Intuitively, the way the auction should work is that whoever bids the most for the assets gets to buy them, and then the creditors get the money. The creditors want as much money as possible, so they should sell to the highest bidder.

There ...