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Originally Posted by Jenx34
I wondered the same thing about how in the world they went bankrupt. Unfortunately, what most people and many companies do, is as more $$ come in, they spend more and more, often in stupid ways.
To your last question, the company could easily have "gone bankrupt" while the people that ran it got rich. That's the protection of incorporating. If the business goes bad, you aren't personally liable. So they may have paid themselves into bankruptcy, whether intentional or not, only they would know.
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I agree with your assessment that people can either squander their profits, overpay themselves (and sometimes hide the money from creditors), or make just bad business decisions and drive the corporation into bankruptcy. Mastro Auctions had very little downside to their business, so I see it as the first two options. Also, when fraud occurs courts can "pierce the corporate veil" and go after individuals or "alter egos" (individuals who use a business identities designed for perpetrating fraud). I'm actually surprised nobody has sued Mastro or Allen after all of this - or have they?