Sorry for the time gap in my posts. Had some family obligations this afternoon. I thought about just dropping this because I respect your opinions and you surely know more about this topic than me, but it is an interesting discussion and maybe I will learn something by continuing.
Why does it seem terrible? It’s unlawful by whose laws? Portugal’s? If Bank of America has those assets in Portugal then they could be seized there and kept for domestic creditors. That’s arguably the right thing for Portugal’s government to do for their citizens. Why would it not be?
It wouldn’t be right for Portugal to say seize the bank’s assets and pay out domestic equity investors while stiffing foreign depositors. But that’s not what I’m talking about. In general the bankruptcy court should prioritize depositors before debt holders before equity investors but within those classes I don’t see any issue with the nation governing the bankruptcy prioritizing domestic members of the class over foreign.
There’s some aspect of might makes right here. Or the means to seize assets and provide a venue for bankruptcy proceedings gives a country an unfair advantage but that’s just how the world works. Why should the bankruptcy be tried in the USA using our judicial and government resources when the company was based on the Bahamas? What is the benefit for the US to doing that?
Yes it does! In the context of FTX the court could say “the assets were comingled in violation of US law and we will prioritize depositors of the US entity who were interacting with this business in compliance with US law over customers who wired money to a hedge fund who then deposited the money into a Bahamas exchange in order to circumvent US law.”
My one and only foray into penny stonks. I got a little spooked when it took most of the day for my sell order to be filled. Not the most liquid stuff.
