Here’s the thing about bankruptcy: While they are heard in courtrooms by judges with everyone involved represented by lawyers, they have nothing to do with justice. Or, more accurately, justice takes a back seat to just about everything else, most particularly whatever counts as efficacy within the confines of a bankruptcy courtroom. This is how a man can spend more than a decade running a company into the ground, only to be permitted to keep that company while leaving its employees and creditors in the lurch, on the grounds that he’s the only person who could keep the business afloat in any way, shape or form.
Now, Lynn Tilton apparently doesn’t know much about running companies beyond what Eddie Lampert knows, which is how to run them very badly while lining your own pockets. But she knows as much about bankruptcy law as he does, which is to say that its courts may be the only ones in the land to recognize the doctrine of “fuck you, pay me and then fuck you again.”
Judge Karen Owens of the U.S. Bankruptcy Court in Wilmington, Del., approved the sale of Global Automotive Systems LLC for $32 million to an affiliate of Ms. Tilton, giving her control of the auto supplier but leaving little for the Zohar funds that own the company….
The Zohars alleged that Ms. Tilton used her position as a lender to GAS to skew the sale process in her favor, manipulating the company’s finances to make herself the only viable bidder…. The Zohar funds said Ms. Tilton structured her bid to leave them with nothing on roughly $150 million in credit they extended to the company. Meanwhile, her loans to GAS are being fully credited toward the purchase price, according to the Zohars…. “There is no meaningful alternative to the proposed transaction that will likely yield a better result,” the judge said.
Bankrupt Zohar Funds Can’t Block Lynn Tilton’s Deal for Auto Supplier [WSJ]