Executing Corporations

[drplokta]

Theres a meme going round "I'll believe that corporations are people when Texas executes one". But Texas "executes" hundreds or thousands of corporations per year, most famously Enron. Bankruptcy is the exact equivalent of execution for corporations -- it's the state exerting its power and causing the corporation to cease to exist. So I guess that corporations are people.

Comments

[pnh.livejournal.com]

Actually, at least in the US, what we call bankruptcy is a poor parallel to the execution of individuals. Lots of companies go through bankruptcy and emerge re-organized and with a second chance, just like individuals. I suspect the term you actually want is "liquidation," the state-administered selling off of the assets of an enterprise that has failed beyond beyond the ability of any state-supervised reorganization to revive it.

[autopope.livejournal.com]

As I understand it, there's a lot more scope for bankruptcy protection and reorganization in the US legal system than in the UK -- it's pretty rare for a company to go bankrupt over here and not be broken up for spare parts/liquidated.

(This is, incidentally, one area where I wish the UK would adopt US practice -- up to a point: obviously it can be abused, but giving large companies that have just encountered a cash flow pinch or a temporary obstacle some breathing room would be hugely beneficial to our industrial competitiveness. Unfortunately for the past 30 years or so UK economic policy has been geared towards satisfying investors rather than makers, so I don't expect that change to happen any time soon ...)

[flick.livejournal.com]

In England, at least (not sure about Scotland), there are provisions for companies that are just having a cash flow pinch and wish to avoid their creditors instigating insolvency proceedings while the problem is sorted out. They include both formal and informal voluntary agreements, but actually this is entirely the wished-for aim of many companies going into administration, and is worked towards by the administrators: liquidation is the next step, not the same thing.