this post was submitted on 11 Dec 2024
353 points (97.3% liked)

Technology

60047 readers
2966 users here now

This is a most excellent place for technology news and articles.


Our Rules


  1. Follow the lemmy.world rules.
  2. Only tech related content.
  3. Be excellent to each another!
  4. Mod approved content bots can post up to 10 articles per day.
  5. Threads asking for personal tech support may be deleted.
  6. Politics threads may be removed.
  7. No memes allowed as posts, OK to post as comments.
  8. Only approved bots from the list below, to ask if your bot can be added please contact us.
  9. Check for duplicates before posting, duplicates may be removed

Approved Bots


founded 2 years ago
MODERATORS
 

“It seemed doomed almost from the moment they decided to go to a sealed bid,” Judge Lopez said. “Nobody knows what anybody else is bidding,” he added.

you are viewing a single comment's thread
view the rest of the comments
[–] [email protected] 164 points 1 week ago (7 children)

Judge Lopez said that the bankruptcy auction failed to maximize the amount of money that the sale of Infowars should provide to Mr. Jones’s creditors, including the Sandy Hook families, in part because the bids were submitted in secret.

“It seemed doomed almost from the moment they decided to go to a sealed bid,” Judge Lopez said. “Nobody knows what anybody else is bidding,” he added.

So the problem is that it didn't maximise the potential income for the bankrupcy case?

Shouldn't that be a "oh well, sucks. but a sale is a sale" problem?

[–] [email protected] 79 points 1 week ago* (last edited 1 week ago) (2 children)

The market decided.

This can't be the first time the courts had to liquidate assets to pay for a civil suit, right? There must be an outline of some sort for them to follow?

[–] [email protected] 11 points 1 week ago (1 children)

The market did not decide, given the bids were secret.

[–] [email protected] 36 points 1 week ago (1 children)

No, that's actually still the market deciding. It's a perfectly standard type of auction that discourages low-ball bids. Bidding is secret, you only get one bid, and you don't know who or if anyone else is bidding.
If you want it, you make your best offer for what you're willing to pay for it, and if someone else bid more they get it. If you would have been willing to pay more with more rounds of bidding, you should have bid that from the start.

Open-bid auctions get better prices for sellers when there are a lot of bidders, and better prices for buyers when there are few. Given there were two bidders, it's fair to seek the most either party will bid, rather than seeking $1 more than the maximum the loosing party will pay.

[–] realcaseyrollins 1 points 1 week ago

Yeah, secret bids aren't normally accepted in auctions. You're generally supposed to know how much people are bidding so that you can bid above them, and I don't think you're supposed to include assets you don't yet have control over as part of your bid either.

These rules not being followed is why the judge was initially so mad in the first place.

[–] [email protected] 49 points 1 week ago (1 children)

Shouldn’t that be a “oh well, sucks. but a sale is a sale” problem?

"A sale is a sale" works fine when both sides to the transaction are well-informed and acting for themselves. When you are selling assets for someone else's benefit, you generally have extra obligations to them, because otherwise you don't really have an incentive to achieve a good price. So courts do generally have some oversight over sale of the assets of a bankrupt estate, to ensure that the trustee is not short-changing creditors just to get the job done quickly.

A complicating factor here is that the Sandy Hook families (who as far as I know are the large majority of the creditors) also supported the sale.

[–] [email protected] 5 points 1 week ago (1 children)

A complicating factor here is that the Sandy Hook families (who as far as I know are the large majority of the creditors) also supported the sale.

I assume there are other creditors who didn't?

[–] [email protected] 2 points 1 week ago

AFAIK the damages paid to the Sandy Hook families were the sole reason he went bankrupt in the first place; without them he'd be profiting.

[–] [email protected] 7 points 1 week ago (1 children)

So it's unfortunately not actually a sale until the judge approves it, it's just an accepted bid.
Sorta like when buying a car. The salesman tells you the price for the vehicle, overpriced perks, and how much your trade in is worth, and you accept the final price. Then the salesman has to get the floor manager to agree, which they always do, because they're the ones with authority to approve the sale. Then you can sign the paperwork and exchange money and you've actually processed the sale. Until then either party can walk away for any reason.

In this case, it's like the floor manager rejected the sale because the cash part of the sale price was less than MSRP, and they didn't think the trade in value mattered.
It's not common for the sale to get rejected, and it's even weirder for them to reject "not cash" instead of paying attention to value.

The judge saying the estate can't accept debt forgiveness in lieu of cash is just odd, since it reduces the debt more than the cash would.

[–] [email protected] 4 points 1 week ago

It wasn’t rejected because the judge thought it wasn’t the highest value among the bids; it was rejected because the judge thinks the auction should’ve asked for follow-up bids

[–] [email protected] 5 points 1 week ago (5 children)

Apparently they also did not allow follow-up bids/outbidding others. It’s called a bankruptcy auction for a reason.

[–] [email protected] 51 points 1 week ago

And there's a trustee for a reason. The debtors decided that the value of keeping Alex Jones away from InfoWars had its own value and were willing to accept a lower bid. There's no fiduciary duty to maximize the proceeds from the sale, and Alex buying back his own assets during a bankruptcy auction is actual fraud.

[–] [email protected] 23 points 1 week ago (1 children)

A first price sealed bid auction is a perfectly common type of auction.
It's functionally equivalent to an auction where you know the value of a thing (like we do a business being liquidated because the owner is in extremely deep unrelated legal debt), and the auctioneer starts by asking for the face value and then progressively lowers the ask until the first person accepts the price.
Instead of trying to get the lowest price possible, people are incentivised to start with their best offer for what they actually think the thing is valued. Allowing follow-up bids encourages people to low-ball and work their way up, which can reduce the price the seller gets for the item.

https://www.investopedia.com/terms/s/sealed-bid-auction.asp

[–] [email protected] -2 points 1 week ago (1 children)

Common in bankruptcy as well?

[–] [email protected] 8 points 1 week ago (1 children)

No idea, and not entirely sure why it matters. If your goal is to sell an asset and maximize proceeds, it's a known and unsurprising strategy, particularly since it gives higher returns when there are few bidders.

[–] [email protected] -2 points 1 week ago

I think it has quite a chance of mattering. There's two choices here: the judge is incomptetent/compromised, or there's a reason this makes sense within the bankruptcy context. I want to explore the latter first before I make any judgements.

[–] [email protected] 6 points 1 week ago* (last edited 1 week ago)

The underlying reason for the bankruptcy is bigger than dollars. Avoiding selling infowars to some other conservative shitheads to continue the harassment of Sandy Hook victims is far more important than dollar signs.

[–] [email protected] 4 points 1 week ago

https://en.wikipedia.org/wiki/Vickrey_auction

There are numerous formats of auction. I don't think a Vickrey auction is what they did, but it is an example of a sealed auction format that is well supported as legitimately and efficiently maximizing value for the seller.

[–] [email protected] 3 points 1 week ago

This was not a typical bankruptcy auction, and part of the trustee’s role was to ensure an outcome that was acceptable to those injured by Jones, eg the Sandy Hook families.

[–] [email protected] 5 points 1 week ago

Follow the money

[–] [email protected] -1 points 1 week ago* (last edited 1 week ago) (1 children)

It’s up to the lender to accept the settlement. They’re the ones taking the loss. The sale is not the result of financial hardship, so the court cannot force the lender to accept an unreasonably insufficient buyout offer for the loan.

[–] [email protected] 1 points 1 week ago (1 children)
[–] [email protected] 1 points 1 week ago

they mean creditor

[–] [email protected] -1 points 1 week ago (1 children)

Whatever gets the sandy hook families the money they deserve.

[–] [email protected] 12 points 1 week ago* (last edited 1 week ago) (2 children)

They wanted the sale to go to the Onion and not some conservative hate group more than the money. They were fully on board with taking the lower amount.

[–] [email protected] 4 points 1 week ago

There’s a legal eagle vid that explains the math:

https://youtu.be/GmDNz7irGgw

[–] [email protected] 2 points 1 week ago (2 children)

I’m no lawyer, but is that how these things work? The state is selling the company to pay a debt. The family owns the debt, not the company. They don’t get to decide how much value gets generated from the sale of the company. So it’s the states duty to maximize the proceeds.

[–] [email protected] 4 points 1 week ago

The estate has a duty to maximize the value of the liquidation, and pay back creditors as best it can. Specifically to settle the debts.

While a creditor can't dictate the value of the estate, they can offer to forgive debt, which is the same for the purposes of the estate.

If the cancelled debt would have been worth more than the cash, then the creditors would be rightfully furious if the state instead sold the asset for less cash and paid them that way.

If you owe me $50k, and I tell you your watch is worth $5k to me, and instead you sell it for $250 and give me that while declaring bankruptcy so I don't get anything else, that's a terrible outcome for me, and great for you if you sold the watch to your friend who then gave it back to you in exchange for $250 later.

[–] [email protected] 0 points 1 week ago

Yes, it is more complicated than just money.