Hacker News Reader

Comment by trollbridge | Hacker News Reader

Bankruptcy runs by different rules than foreclosures (which is why people about to be foreclosed on often file bankruptcy). Specifically, junior creditors are protected, and everyone gets a proportionate share of the proceeds.

In a foreclosure, the senior lienholder usually gets the property and the junior lienholders either get nothing or get what’s left over after the senior creditor gets whatever they were owed.

I’m really not sure why the creditors in this case did a shady no bid deal… it seems they would have had an easy time buying out the junior creditors and then getting whatever they want, although I’m also not sure why anyone would want the “infowars.com” domain and a warehouse full of vitamin pills.

View on HN

> I’m really not sure why the creditors in this case did a shady no bid deal…

The reason is because there were two civil judgements against Alex Jones to satisfy with the second judgement being about 27x larger than the first. As a result, it is mathematically impossible to run an auction that triggers an outcome large enough to satisfy both judgements proportionally and positively. Many members of the second judgement decided to forego any winnings from this auction so as to satisfy the first judgement positively on the condition they would earn a share of ad revenue from the intellectual property in the future. Their primary motivation was not ad revenue or any other form of income, but instead ensuring the concerned intellectual property rests with an owner not friendly to Alex Jones.

That is the reason the Onion won the auction despite offering the lower of two bids, because the larger bid did not positively satisfy the parties to the first judgement.

> I’m really not sure why the creditors in this case did a shady no bid deal… it seems they would have had an easy time buying out the junior creditors and then getting whatever they want, although I’m also not sure why anyone would want the “infowars.com” domain and a warehouse full of vitamin pills.

The creditors with smaller claims hate the guts of the creditors with bigger claims, and likely wouldn't sell for any amount of money. Also, I am not sure whose claims have been decided to be senior to other claims (seniority of claims has little to do with monetary amount). Not all types of debt are equal.

Bankruptcy is something that happens to the borrower. Foreclosure is something that happens to the property.

Correct, although a foreclosure of a property will be affected if the owner of said property undergoes bankruptcy. (For private individuals, such as Mr Jones, some or all of their primary residential property is exempt from bankruptcy, and the foreclosure itself will be stayed until the bankruptcy is adjudicated, and, generally speaking, foreclosure will be stopped if they resume making mortgage payments, regardless of prior delinquencies.)

Reply on news.ycombinator.com