Michael Gracie

Jeffrey Miron opines that instead of accepting a bailout, banks facing failure should opt for bankruptcy filing instead:

Bankruptcy does not mean the company disappears; it is just owned by someone new (as has occurred with several airlines). Bankruptcy punishes those who took excessive risks while preserving those aspects of a businesses that remain profitable.

Further, Chapter 11 passes restructuring risk to willing participants - those motivated and capable of adding new value to the business, whether it be capital, brainpower, or in most cases both. As banks go, I am not sure who understands the credit derivatives transaction chain well enough to take on such contingencies (but I’m am certain they exist), and court-supervised reorganization does allow for due diligence time if the entity can hold out (often assuming debtor-in-possession financing is available too, which could be questionable in this credit environment).

Outside of the banking crisis, Forbes notes it is never a bad idea to be prepared:

If you feel your business may be facing financial distress, meet with a work-out attorney now, before it is too late and your business becomes another statistic.

What Forbes doesn’t tell you is that once in Chapter 11, you’ll be faced with a myriad of financial and operational decisions that can become, to put it mildly, emotionally overwhelming. Add that in a reorganization you will be required to prove the business is worth more alive than dead, meaning get ready for a ton of strategy shifting and number crunching.

Editor’s Note: If you need someone who can stay alert during the trauma, priming objective decision making and spreadsheet mashing during trying times, contact me. I’m not only capable - I actually enjoy the stress. And I have plenty of references, both professional and personal, that can attest to the effectiveness of my candor and elbow grease.

Barclays has a sweet deal in hand - all it takes is a bankruptcy judge to give final approval. Hearing set for Friday.

Editor’s note: Start reading the linked article at paragraph three - the bit at the beginning about Chelsea Clinton being at today’s hearing not only doesn’t add anything to the real story, but it makes the whole process sound like some kind of circus side show.

No mention of purchase price on the $639 billion of assets (or portion thereof), probably because they need court approval first.

UPDATE: Forbes says the price is around $1.75 billion, and includes the investment banking and capital markets operations, as well as the Lehman headquarters property. In addition (I assume) Barclays will take on trading assets valued at $72 billion, and related liabilities of $68 million.

It’s just harder for Google to find.

Squidoo took a tongue (and Google) lashing for getting overrun with spammy pages/accounts. They’re open to the viewing public and efficient at generating attention from the rest of the internet - it was to be expected.

Facebook is growing like wildfire, and it seems a lot of folks are betting their reputations on it by showering the social network with glory. I say where there’s that kind of attention, there is bound to be someone lurking around trying to find a financial advantage. You can debate legitimate avenues for generating income off Facebook’s back, or you can keep your eye’s peeled for the sleek underbelly already working it’s way in. Some folks already see the latter, and aren’t too happy about it (although I’ll take criticism by the A-list crowd over the chance of someone from the Z-list crowd making some spare coin with a grain of salt).

Yes, Facebook has great privacy features, and it is closed off to the rest of the world to boot. But all that means is if spammers and scammers jump on the platform, it’s the users that are going to have to deal, instead of counting on Google to put the kibosh on it for them.

UPDATE: Even if the barrage that hits you is legitimate, it’s still a barrage. I don’t know what’s wrong with being so “web popular,” other than the fact that if you reject the invitations people will call you a jerk. Guess the price of online fame is bankruptcy.

UPDATE 2: Now, speculation about a hacking. Facebook offers a plausible explanation via Scoble.

UPDATE 3: More. This time it’s some source code exposed. Pete Cashmore throws in his ten cents - “An exposure of user data, therefore, is the identity thief’s dream.”

I thought I was dead, and looking down at myself reading the laptop screen. There is a pretty carefully crafted post on US economic uncertainties lying here - it almost seems out of place. Even the comments are uncharacteristic, and I have to say I agree with most of it.

Debt at all levels, no savings. And funky numbers being reported everywhere.

These issues are not going to just disappear, and I’d be hard pressed to think it can just be “worked out.” The problems run deeper than even the face value numbers suggest.

As for solutions, well that is anyone’s guess. But if you could encapsulate the situation into a corporate entity, I might start by taking a walk down to US Bankruptcy Court (and hopefully I was doing some business in New York so I could file in the Southern District).

According to Brian McWilliams, Spam King Scott Richter has been taken off ROKSO, otherwise known as the Registry of Known Spam Operations.

Now speculation is being made as to whether Richter has gone legit. I say it is simply too soon to tell.
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The other day, Scott Richter (or someone claiming to be him - maybe one of his posse), sent me an email with with a court ordered creditor notice. Now Aunty Spam has posted a similar message.

I am so disappointed - I thought I was special.

During my visit to bankruptcy court last week regarding the OptInRealBig and Scott Richter cases, I noted that there were quite a few large creditors present, but not a lot of little ones. I am not sure if people realize this, but if you were the recipient of spam from OptInRealBig.com or its affiliates, you too may have a claim against the company.

While you have to be certain in your facts, there is a way for you to obtain information on filing a claim or even joining the creditors’ committee (should one ever be formed - I do not think this has happened yet).

How pray tell? Just ask Spamroll..
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I had the chance to stop by the US Bankruptcy Court yesterday, to observe the latest in the OptInRealBig and Scott Richter bankruptcy cases.

It was less than a packed courtroom, with roughly 15 people there including Judge Tallman and myself. Mr. Richter had no huge entourage - it was just he, two lawyers, his father, and one other. On the other side, we had an attorney representing the US, one for Microsoft, one for American Family Insurance, and one for Daniel Balsam (who flew in from California this morning). In addition, there were two other attorneys present as part of a potential creditors committee (not yet formed).
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You can find a copy of Scott Richter’s personal bankruptcy petition in Acrobat format here, compliments of Ethan Preston, an IT and Privacy attorney out of Chicago.
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