American Bankruptcy Institute - ABI

  

Categories: Banking

Either the name of the country’s worst business school, or its largest association of bankruptcy professionals. Since the second thing appears on their website, we’ll go with that.

Founded in 1982 (just like Nicki Minaj), the ABI boasts 12,000 members covering such professions as judges, bankers, professors, accountants, turnaround specialists and (our personal favorite) auctioneers. Complete the following joke: "a banker, an accountant and an auctioneer walk into a bar..."

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Finance: What is recapitalization?34 Views

00:00

finance a la shmoop what is recapitalisation all right people think

00:07

nee capitalization you know in Jersey like when you owe the mob money at least [thug breaks knee with bat]

00:13

that's what it feels like if you're a common equity stockholder of a company [businessman with common stock]

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that has been recapped well usually recapitalisation is a very kindly loving

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politically correct term for a pal you're bankrupt you borrowed money you

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promised to pay back and you didn't so now you're out and the lenders now own

00:33

your company buh and buy so typical recap comes from a company that was very

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early stage and had preferred stock upon preferred stock from venture capital

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investors sitting above their common in the priority stack and eventually the

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company burned through eighty seven million dollars and it has just a [dollars on fire]

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million bucks left in the bank and it built something out of that eighty seven [company logo graveyard]

00:58

million not quite worth putting here yeah but it might be worthy of a new

01:02

investment of say yo thirty million or more dollars but the marketplace values [money going into company briefcase]

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this zombie company yes that's what they're called at a [zombie briefcase walking at night]

01:11

value well less than the eighty seven million that has been raised previously

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so everything is marked down usually with a common in total being worth [store during closing sale]

01:19

something like one percent of the new company and that's oh so sad for the

01:23

founders because it was a hundred percent of the company the day they

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started so they were recapped and lest more mature companies feel left out well

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recapitalisation happens in later stage companies as well and the radio industry

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famously took on too much debt in the late 1990s and then people stop [radio knob getting changed]

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listening to Drivetime radio as cell phones and satellite radio intruded I

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bring radio borrowed five billion dollars at seven percent to oh three

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hundred fifty million a year and then when cash earnings fell well below that

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number while the company had to recap its five billion of debt such that those

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debt holders now own essentially all of I brain radio and hope to someday milk

02:03

enough cash out of it to get their principal back knowing and it'll likely [goat getting milked]

02:06

be a very low interest rate or a low return on their and

02:10

if a positive one at all hopefully that all made sense you the first time though

02:14

because well we don't have time here in this video for a recap

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