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Texas electric firm files for bankruptcy citing $1.8B in claims

reuters.com

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Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#111

Post by 411111111111111 »

eloisius wrote: post #59
madaxe_again wrote: post #18

Earlier quoted context omitted.

I do find it troubling, however, that it’s more often than not used to clear down the ledger of a going concern, and then continue business as usual, same everything, just a new incorporation. You can bet your bottom dollar that they’ll be buying their own assets back on cents on the dollar, reincorporating, putting everyone back in the same positions, and paying some nice fat bonuses out of the capital they’ll be gi…

Bankruptcy isn’t supposed to be punitive. A company clearing up the books and then being able to generate a profit again in the future is better for creditors than destroying the company completely.

While true, it does enable some strategies in which you purposely run your company with a deficit while paying yourself a good salary until bankruptcy, with no lasting consequences.

And as the previous poster said: you can even "turn the company around" after and pay yourself a massive bonus for making it profitable again.

Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#112

Post by bko »

eqvinox wrote: post #98
snidane wrote: post #94

Earlier quoted context omitted.

It's actually well understood that privatisation for platform industries is bad, privatisation for businesses running on top of platforms is good. Networks and infrastructure = little to no competition. Eg. networks naturally settle in a optimal geographical location and utilize economy of scale then. Can't compete with that. So don't privatise platforms. Rather - make them monopolistic and make them share the revenu…

Road networks are a great example. Just assume the hypothetical position of a competitor. Where are you gonna build a competing road in, say, NYC? Each block only has 4 sides, and each of them already has a street. You could maybe compete on interstate highways or other long-area bits. Maybe. That's stretching it. Build a competing water supply network to each house? Another set of sewers? Electricity distribution? H…

I don't know if NYC infrastructure is a good example.

The second avenue subway was the most expensive subway in the world on a per mile basis. Considerably more expensive than Paris or Tokyo

> The estimated cost of the Long Island Rail Road project, known as “East Side Access,” has ballooned to $12 billion, or nearly $3.5 billion for each new mile of track — seven times the average elsewhere in the world

Similarly, the fare only covers around 50% of the operating costs which hardly seems fair for NY state taxpayers that pick up the expense despite receiving no benefit.

The competing services for infra in NYC are cabs, car pools, private buses, bike rentals, scooters, subways. For getting into/out of the city, you have a number of bridges. For instance, I can take Lincoln tunnel, Holland Tunnel or ferry. It would be great to have more options and obviously its not easy to build tunnels, but private ferry and water cab services could be expanded

[0] https://www.nytimes.com/2017/12/28/nyregion/new-york-subway-...

[1] https://www.bloomberg.com/news/articles/2019-03-14/what-s-a-...

Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#113

Post by rini17 »

eqvinox wrote: post #98
snidane wrote: post #94

Earlier quoted context omitted.

It's actually well understood that privatisation for platform industries is bad, privatisation for businesses running on top of platforms is good. Networks and infrastructure = little to no competition. Eg. networks naturally settle in a optimal geographical location and utilize economy of scale then. Can't compete with that. So don't privatise platforms. Rather - make them monopolistic and make them share the revenu…

Road networks are a great example. Just assume the hypothetical position of a competitor. Where are you gonna build a competing road in, say, NYC? Each block only has 4 sides, and each of them already has a street. You could maybe compete on interstate highways or other long-area bits. Maybe. That's stretching it. Build a competing water supply network to each house? Another set of sewers? Electricity distribution? H…

Bore a tunnel!

Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#114

Post by phire »

enkid wrote: post #110
phire wrote: post #88

Earlier quoted context omitted.

> . When private companies screw up, who gets left with the bill? In theory, the company is meant to declare bankruptcy (or seek more investment from shareholders) as soon as their books say they are insolvent. A company is Insolvent when it's liabilities are higher than it's assets, even by a single dollar. The theory is that because the company is required to declare bankruptcy as soon as possible, it should only b…

I've never heard this interpretation of bankruptcy. What I have heard is it's used when an entity can't repay their debts. This is not equivalent to liabilities being one dollar larger than their assets. Normally, bankruptcy doesn't dissolve the entity, it just restructures the debt. Dissolving the company can be done without bankruptcy and I believe is the process you are talking about when a company is fully solven…

In the US, there Chapter 11 Bankruptcy (which is restructuring, as you say) and Chapter 7 Bankruptcy which is the liquidation due to insolvency that I describe here.

Where I live, there is no formal equivalent to Chapter 11, and liquidation is colloquially known as Bankruptcy.

While the terms may vary, the accounting and the general laws are reasonably constant world-wide.

Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#116

Post by refurb »

cies wrote: post #91
leoedin wrote: post #81

Earlier quoted context omitted.

Yes, but many investors will have bought their share in the company, and that is worthless. Whether they had enough money paid out through dividends in the run-up to that point or not is situation dependent - the company could not pay dividends at all.

> many investors will have bought their share in the company, and that is worthless. That's just part of the risk. We're now talking about the bill that is still on the table. If the "investors" were fully responsible for their "investments" they would not have worthless shares, but they would have to pay up for what the company still owes. That their risk stops at "shares being worthless" is exactly what I mean by t…

So you think them losing 100% of their investment is being “shielded”? I mean, they aren’t the only investors.

Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#117

Post by rocqua »

snidane wrote: post #94
jonplackett wrote: post #41

This is the side of privatisation that gets ignored. When private companies screw up, who gets left with the bill? Private companies have no incentive to be ready for really big problems because they know they’ll get bailed out, or just not have to pay. Privatise the profit, socialise the losses.

It's actually well understood that privatisation for platform industries is bad, privatisation for businesses running on top of platforms is good. Networks and infrastructure = little to no competition. Eg. networks naturally settle in a optimal geographical location and utilize economy of scale then. Can't compete with that. So don't privatise platforms. Rather - make them monopolistic and make them share the revenu…

> It's actually well understood that privatisation for platform industries is bad, privatisation for businesses running on top of platforms is good.

Its well understood by people who studied it well. However, there are still many pushes and arguments for privatisation that do not take these well understood facts into account.

Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#118

Post by refurb »

fwsgonzo wrote: post #31
refurb wrote: post #25

Earlier quoted context omitted.

That’s a massive stretch for “socialize the losses”. By that logic any time a business fails and it impacts a lot of people the losses have “been socialized”. And CA is far from a free market. The PUC has PG&E on a short leash and the results have been a disaster. Edit: Replying - No, bankruptcy is actually the exact opposite of socializing losses.

How do you think the bankrupt utility will start up again? Hint: Socialized costs.

Another energy company will likely buy them. How is that socializing costs?

People throw that term around without actually knowing what it means

Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#119

Post by maxerickson »

madsbuch wrote: post #90
jiofih wrote: post #47

Isn’t it mind-boggling that under the stress of winter, the same infrastructure that they had yesterday suddenly costs billions of dollars more to operate? Profiting from calamity. The exact opposite of how public utilities should operate.

I think I read somewhere that prices are capped at USD 9000 per MWh. That is still USD 9 per KWh which is insane pricing.

The regulator set prices at $9000 with the idea that the high price would reduce the shortage.

Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#120

Post by rocqua »

bko wrote: post #112
eqvinox wrote: post #98

Earlier quoted context omitted.

Road networks are a great example. Just assume the hypothetical position of a competitor. Where are you gonna build a competing road in, say, NYC? Each block only has 4 sides, and each of them already has a street. You could maybe compete on interstate highways or other long-area bits. Maybe. That's stretching it. Build a competing water supply network to each house? Another set of sewers? Electricity distribution? H…

I don't know if NYC infrastructure is a good example. The second avenue subway was the most expensive subway in the world on a per mile basis. Considerably more expensive than Paris or Tokyo > The estimated cost of the Long Island Rail Road project, known as “East Side Access,” has ballooned to $12 billion, or nearly $3.5 billion for each new mile of track — seven times the average elsewhere in the world Similarly, t…

Its an interesting example, subways seem to have some minor room for competition, so the argument against privatization based on "there cannot be competition" does not quite apply.

Even here though, there is a coordination problem to ensure various companies remain mutually compatible.

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