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But aren't the debt holders typically the first ones to be paid in a bankruptcy?



Yeah true, I guess it wouldn't be a question of $.50 on the dollar vs nothing. Maybe extending the repayment period so that payments are lower but it increases the total financing costs?

It just seems to me that if a company is doing something profitably, that would be the company I would want to lend money to.


Or get your money out now in the first tranche and do something less risky with it? It’s not just the face they are profitable, it’s opportunity cost and risk also. If pulling out now screws everyone else involved,it’s not really their problem is it?


yes, but some of the posters here are being purposefully disingenuous.

When getting a mortgage, one of the things the companies will look at is your income to debt ratio. For a company it's no different. Yes, there have been companies that have gone under for too much debt. There have also been plenty of companies that have done well even with debt.

When you hear people say "OPM", aka "Other People's Money", what they typically mean is taking on debt and paying it down over time.

And for the poster who stated you don't have to service equity... that's completely bullcrap. We've all heard stories of VC's shuttering a profitable company because they weren't profitable ENOUGH. There's a cost to everything, that equity isn't free.




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