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Comment by nivertech | Hacker News Reader

> Making profit is always a goal you achieve while doing something else: selling local seafood

It's selling expensive local seafood when your competition selling cheaper imported frozen stuff.

> Also, companies receive and pay back loans all the time, it's quite a common procedure. Why should it be any different here?

If there was no difference, then there would be no need in inventing alternative capital formation legal structures like PPT.

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They were already selling expensive seafood before, presumably with profit, why should that have changed? I imagine for a few years part or all of their profit will go to the lender while the pay back the loan. Then it's all for them again, except they're now owned by the trust instead of by the previous shareholders.

The point of having a trust is not to form capital, but to enforce a certain company governance system (as described in the legal documents with whom the trust is set up) without tying it to who happens to be the owner at any given moment.

IMO governance/voting rights are an essential part of capital formation.

If you give somebody else governance/voting rights as part of the transaction - you might've created a security. That's why I mentioned capital formation.

There was an SEC paper which deemed "The DAO" (the first DAO) as a security.

I think most "governance tokens" also deemed as securities.

I can't know what they're doing, but it doesn't look like they're giving the lender any voting right. They're just borrowing some money and returning them in the following years. And I still can't see why this imply that the likelihood of the company failing is high.

It sounds like you don't understand how business loans work. This is not a VC play.

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