Create a new person. Kill off the old person but keep their assets.

[ozymandius]

The story starts here:

Bank of America May Not Guarantee Countrywide's Debt

May 2 (Bloomberg) -- Bank of America Corp., the second- biggest U.S. bank, said it may not guarantee $38.1 billion of Countrywide Financial Corp.'s debt after taking over the mortgage lender, increasing the likelihood of a default.

``There is no assurance that any such debt would be redeemed, assumed or guaranteed,'' the bank said in an April 30 regulatory filing, adding that no decision has been reached. Investors had grown more optimistic the bank would back Countrywide debt. Ratings firm Standard & Poor's cut the mortgage-lender's debt to junk today after saying it would raise the grade earlier this week.

.....

The $4 billion purchase of Countrywide is scheduled to close in the third quarter. Investors have speculated Bank of America may seek a lower price or cancel the deal because U.S. home prices and sales have deteriorated.

``This confirms how tenuous this transaction is,'' said Christopher Whalen, managing director at Institutional Risk Analytics, a banking research firm in Torrance, California.

Whalen expects Bank of America to absorb the best assets, including Countrywide Bank, while the debt remains with a new company created by the merger, Red Oak Merger Corp. Red Oak may then file for bankruptcy, shielding Bank of America from liability, Whalen said.

.....

``If bondholders get stiffed by Bank of America, it will scare the hell out of everyone,'' Whalen said. ``This is called thinking the unthinkable.''

As Professor Atrios says: I Wish I Could Do This

---

Don't we all?

[ozymandius]

1. Though I loathe to be the first to reply to my own thread -

This is piracy. "Equal treatment under" the law some say. Then there's more equal treatment under the law for others.

[Adsos Letter]

2. I think we are on overload...

at least I know I am...nothing these people do shocks me anymore.

[notesdev]

3. I have also

been following these events with fascination. Interesting times, as they say.

[unblock]

4. i'm sure they have smart lawyers, but i can't get the term "fraudulent conveyance" out of my mind...

any way you cut it, equity holders getting paid ahead of creditors violates at least the intent of bankruptcy laws.
and any way of disposing of assets shortly before a bankruptcy filing is suspect and can be yanked back by a bankruptcy court.

like i said, i'm sure they've got it all figured out, e.g., the bankruptcy filing happens more than 90 days after the merger, it's harder to yank back.

on the other hand, fairly explicit statements prior to the transfer of assets that the intent was to remove the assets and leave the creditors with nothing in exchange is not something i would want to defend in court.

[Mojorabbit]

5. it seems like

this kind of thing should be against the law?

[MattSh]

6. Nothing is against the law...

when your friends write the laws for you.

[dmr]

7. Creative theft

If any of us tried to do something like this - the DA would land our butts in jail.

What a disaster this has all become.

[formercia]

8. My apologies to Vultures, but...