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Comment by Scoundreller | Hacker News Reader

Miami-Dade County did that: sold their $17m claim (because they owned the stadium that they sold naming rights to FTX) for probably about a third:

> “I’ve never worked on a bankruptcy case that got better. It always gets worse,” said Commissioner Raquel Regalado, a lawyer who now works as a broadcaster. “The idea of just getting out as early as possible seems like a great idea to me. “

Those were some expensive words. And in general, always somewhat expensive words because the hedge fund buyers generally don't work "lose" into their models.

https://www.miamiherald.com/news/local/community/miami-dade/...

Selling your claim is only a good deal if the hedge funds are drunkenly stupid, you have no other assets/lending sources and are going to die soon or have debt at payday loan rates.

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Selling your claim, or a portion of your claim, might also make sense from a risk tolerance / declining marginal utility of money point of view, if it represented a large enough portion of your net worth.

Or put another way - if there were an investment opportunity that that had an 80% chance of 3x-4x returns in the next 2-3 years, I might consider investing 25% or even 50% of my net worth in that opportunity. But I certainly wouldn't invest 95% of my net worth.

> Those were some expensive words.

I find it weird that you condemn that decision based on perfect hindsight.

> Selling your claim is only a good deal if the hedge funds are drunkenly stupid, you have no other assets/lending sources and are going to die soon or have debt at payday loan rates.

Selling your claim reduces your exposure and eliminates the risk that you'd get even less after the bankruptcy process concludes. It also lets you book the loss now and move on. That's valuable to some people. Consider that people have different motivations and needs than you do.

I fail to see how the decision was anything less than decisive prudence.

Your cited article makes it abundantly clear that the provenance of said $17 million claim was a default clause entitling Miami-Dade County to three years worth of naming-rights fees.

They sold that speculative claim for $5 million cash---effectively recovering that year's otherwise uncollectible receivables---then immediately turned around and locked in a 17-year, $117.4 million agreement with Kaseya[1]; back-of-the-envelope says that's an implied ~$5.4 million (2023 dollars) per year with 3% annual inflation adjustment baked in.

Call me naive, but I imagine that if you're in the business of running a multi-purpose arena with real opex, you've gotta be the dumbest risk manager in South Florida to allocate expensive legal resources in chase of speculative claims when a mutual opportunity to repair a gapping hole in your balance sheet presents itself and you have a willing long-term replacement suitor lined up.

[1] https://www.miamidade.gov/global/news-item.page?Mduid_news=n...

The overarching question is: why should the County have thought the hedge funds are overpaying for the claim and to take the money and run?

Usually when you have several suitors that purely have profit in mind, you're the mark. Doubly so when their cost of capital is higher than your own.

> to allocate expensive legal resources in chase of speculative claims

On a claim this big, the bankruptcy trustee takes care of that for you. They're literally a fiduciary. The cost would be reading whatever gets mailed to you, but at the end of the day, there isn't much control you have over the ultimate outcome.

And uhhh, in terms of credit worthiness, Kaseya has an interesting history: https://en.wikipedia.org/wiki/Kaseya_VSA_ransomware_attack .

They don't have to be overpaying. It was a win win. The way I read it the county got more money this way than if they held it.

They they sold the stake ultimately worth 17 million, but they got their rights back, which they resold for 16 million. As long as they sold their stake for 1 million or more, they are in the green.

The rights were back to them at the time of default. It was independent of the claim sale.

(They won on the reselling of the naming rights too by leasing them out for more per year than ftx)

Thanks for the clarification. I thought the two were tied

Overpaying or underpaying was irrelevant: the dollar amount they got was what mattered, and they were satisfied with that amount.

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