/biz/ - Business & Finance

Hey fellas, autist bro who loves to kek bondies here. This has less to do with dockets and instead has to do with 6th street's recent earnings call. During this call, 6th street mentioned that there are a few things holding up the final BBBY conclusion, one of them is a "make whole" issue as seen in the image. Interestingly enough, make whole provisions generally mean that even though borrowers can pay off the bond at any time, they have to compensate the bondholders for doing so. This is usually used if a borrower can refinance at a lower rate, otherwise it wouldn't be worth it. This is because borrowers have to pay their entire principal PLUS interest PLUS a premium based on loss future cash flow if a make-whole provision exists. That premium can be a lot, especially if the bond rate is high. HOWEVER, in chapter 11 most courts rule that make-whole provisions do not need to be paid since a default event occurred. Borrowers have no obligation to make-whole bondholders even if other debtholders are paid in full. American Airlines, a company that emerged from Chapter 11, has experience kekking their bondies. AA sought post-petition chapter 11 financing to pay off existing secured debt, just like BBBY. Bondholders whined to the courts that because of this, they were entitled to their make-whole provisions. The courts told them to fuck off. AA gave them new bonds with new terms, and also gave shareholders shares in the new company. Everyone got new issues and the company emerged from Chapter 11 through reorganization. This is the most likely path for BBBY as indicated by the dockets and other official clues. Twitter schizo shit aside (which don't get me wrong, I love), SOMEONE(s) is financing this company and taking a large stake in bonds and shares. It's just that shrimple. Not selling.