Harry & David files for bankruptcy after going through the Wall Street ringer

Who did anything criminal? If anything the bank or financial institution that bought the debt is the fool (though they usually passed the debt onto others) as they own the paper that is now worth less.

 

This.

I don't really care that the bondholders lost their bet or that the buyout firm made a bundle or whatever. The corporate and financial folks can settle whatever beef they have with each other in the bankruptcy court (fraudulent transfer, etc.).

The issue is that there is a real company there, with real employees, trade creditors, etc. and these guys often get screwed in the event a leveraged buyout fails.

 

the company was failing anyway, it happens. i'm not heartless, i'm unemployed, but i understand that companies go out of business. its already pointed out, the family took their money and ran before this.

 

but is it right?
should this be ALLOWED?

While it may not be illegal . . it seems crooked and immoral.

Rocket River

 

The quote from the OP said they made an operational profit, but debt service on the LBO loan took them into the red and into bankruptcy.

If so, they are not going out of business. Instead, it seems they likely have a viable business and should be able to dig out of it after emerging from chapter 11 with a lesser debt load, particularly when the economy recovers somewhat.

 

a couple of things,

the company is likely going away but that hasn't been decided yet.

secondly, the company had a bad holiday season, and even the quote from someone saying they have too much debt also concedes they have poor customer service. this company seems like they just have failed to adapt to new realities.

 

http://online.wsj.com/article/SB10001424052748703739204576229113684414704.html?mod=googlenews_wsj

Actually, the decision has been made, they are restructuring the bond debt in a debt-for-equity swap. They might go out of business one day, but this is not the decision right now:

A bad holiday season doesn't mean they cannot sustain operations after the debt for equity swap. Poor customer service and other operations issues can be corrected.

It appears that the investors/bondholders believe that there is prospect for correcting these things moving forward. There's no guarantee for success (for example, the new $55 million stock sale may fail, operations problems can fail to turn around), but this is not a liquidating bankruptcy.