Hacker News Reader

The legal term of art for this is "fraudulent conveyance". "We strip off all assets and then declare bankruptcy" has been a known failure mode for like 500 years.

cf, https://en.wikipedia.org/wiki/Fraudulent_Conveyances_Act_157...

View on HN

I’ve wondered if “stripping assets” should require a sort of liability insurance. In the simple case: a company requires 5m in liability insurance to give out 5m in dividends. If the company later declares bankruptcy, any creditors/regulatory agencies can go after the insurance company.

Given the high bankruptcy rate of newer businesses, I'm not even sure how insurance could be feasible unless the policies cost millions per year. Which is a non-starter obviously.

Also known as private equity playbook

Reply on news.ycombinator.com