The pandemiconomy gets weirder and weirder as time goes by.
First we have dumb money flooding financial markets. Then we have unlimited asset-buying by the Federal Reserve, as well as unlimited money-spending by the federal government. Then we have companies that raise millions but don’t do anything. Now we have bankrupt companies that unfile to receive a bailout and then file for bankruptcy again.
Yep.
According to Bloombeg News, there are bankrupt companies that unfile their bankruptcy in order to receive funding from the Paycheck Protection Program (PPP). Then, once these firms get the money, they file for bankruptcy again.
And, interestingly enough, some of these companies filed for bankruptcy months before the coronavirus pandemic engulfed the United States economy.
From Zero Hedge:
One of the first companies to unfile was Starplex Corp, a Portland, Oregon-based provider of security and related services for concerts, fairs and sporting events. Starplex argued that if it had to stay in bankruptcy without a PPP loan, it would most likely have to liquidate. Starplex got a loan and returned to court within a month.
Henry Anesthesia Associates used the technique even though its original bankruptcy began last September, long before the Covid outbreak. The Stockbridge, Georgia medical service left court protection in June to pursue a PPP loan, and returned on July 28 after getting almost $1 million. The move was justified, Henry said in court papers, because it’s the sole anesthesia provider to the local hospital, and it “continued to be on the front lines fighting the Covid-19 pandemic.”
Put simply, the zombie companies have been reincarnated, only to die again.
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