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socrateaser
socrateaser, Attorney
Category: Bankruptcy Law
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Experience:  Attorney and Real Estate Broker -- Retired (mostly)
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On a BK #7 -Does Stockholders have any rights-??????Public

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On a BK #7 -Does Stockholders have any rights-??????Public Corp=Being bought thru FDIC by Ex-Goldman-Sachs Executives

If a shareholder purchases shares of a bank knowing that the bank is FDIC insured, and that the rules permit a government asset seizure, then the shareholder's rights are subordinate to the government's, and the government can thus take the corporate assets, to the detriment of the shareholder.

 

 

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Customer: replied 7 years ago.
This is not what I'm looking for ; I want to know whether the current FDIC is hurting shareholders -----------in Banks they take a interest in and then get repaid as the FDIC retains stock and is taking I believe 30% and the balance is in stockholders hands -?

My previous answer addresses your question. The FDIC's seizure of assets, while leaving the seized corporation an empty shell with nothing but debt, effectively destroys the corporation's value.Moreover, the FDIC sells the assets for next to nothing, which even further devalues the corporation.

 

So, yes, it's a windfall for those who purchase from the FDIC. Ordinarily, in a bankruptcy, the court would void any transaction between the corporation and an outside party, unless the transaction were in exchange for "reasonably equivalent value." But, not in these FDIC deals.

 

 

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