Intentional corporate insolvency

March 25, 2008

Corporate grim reaperStuff in this life happens for a reason.

And the only reason anything in business happens is to make a return for those that are in control.

All corporations are born, mature and die: They have a lifespan. Some natural; Others not so much.

What many people fail to appreciate is that many businesses are assisted in their own suicide to avoid paying out their creditors and investors (once the cash is safely off-shore, mind you).

Weak or non-existent insolvency laws make it very profitable for fraudsters to take in money in Corporation1, transfer it to Corporation2 (and elsewhere) and then have accountants, corporate lawyers and consultants kill Corporation1.

This parts investors from their money. Usually 100% legally.

  1. Any liquidator that doesn’t admit that corporate euthanasia happens frequently is either a liar or a scoundrel or both.
  2. If a government fails to provide a law, then this Intentional insolvency trick is perfectly legal (ie. no lawsuit will remedy the loss).

Ever wonder why the fiddlers don’t even bother to flee the scene of the crime? The joke is on you as an investor: There haven’t been any laws broken.

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