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What Was Quartz?

(www.zachseward.com)
141 points mooreds | 5 comments | 07 Apr 25 22:24 UTC | HN request time: 0.001s | source
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GoRudy ◴[08 Apr 25 02:55 UTC] No.43617963[source]▶
Nothing about that article surprises me regarding G/O but there is one point that Zach makes about his transaction that he is wrong about:

"Thanks to G/O's stubborn insistence that it only wanted Quartz's assets and not the corporate entity"...

this is not stubborn it's quite common and is absolutely the right thing to do for many companies interested in another business. If they buy your entity (stock transaction) it comes with all the legal liability.

Zach probably doesn't understand how much more likely his deal was to close as an asset purchase rather than a stock purchase. A stock purchase comes with lots more diligence and legalese. If they are buying your stock they are buying all your baggage and potential legal matters, it requires a lot more work including a laundry list of representations by the seller. G/O did everyone a favor by sticking to an asset purchase and getting the deal done. that's where the positives end it seems.

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1. hansvm ◴[08 Apr 25 05:38 UTC] No.43618631[source]▶
> If they buy your entity (stock transaction) it comes with all the legal liability

For dying companies, most of the time it's fraudulent and illegal to create a transaction divesting the good assets from the bad debts. Why is that potential problem not an issue for a proposal to sell off everything good and leave behind an insolvent shell?

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2. disillusioned ◴[08 Apr 25 07:11 UTC] No.43619119[source]▶
I mean, this is literally what an Assignment for the Benefit of Creditors (ABC) acquisition is (or an Article 9) and the specific goal of an ABC is to allow for some semblance of the company's assets to persist unencumbered by an acquirer and without creditors having any further rights to their debts, aside from what they can claim from the proceeds of the ABC.

It's an alternative to bankruptcy that allows for the continued functioning of the business in many cases, and it absolutely leaves behind an insolvent shell. (And acquirers will go through great pains to avoid incurring "successor liability.")

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3. vetrom ◴[08 Apr 25 16:10 UTC] No.43623373[source]▶
I'm not sure you answered the question here though, why should that sort of transaction be legal? Is there a compelling public interest in allowing this sort of transaction?
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4. GoRudy ◴[08 Apr 25 16:35 UTC] No.43623668[source]▶
That's not how these things work. When a company sells an asset the funds go back to the company that sold that asset. So if the "seller" has debts or other obligations those still remain and proceeds from the sale would go towards satisfying those. However, in this case it sounds like the deal was largerly about the employee costs + some cash to the sellers.
5. devilbunny ◴[08 Apr 25 19:59 UTC] No.43625847{3}[source]▶
It's a pretty common way for companies to go through bankruptcy. If the courts can identify a viable business inside the company, where the main problem is debt that it can't feasibly pay, they will allow it to proceed with business while cancelling the debt. Since the alternative is having the whole thing go under, without much chance of creditors being made whole, there is a benefit to society: some of the people keep their jobs.