Paul Allen

He was Bill Gates' "technical talent" at the fledgling MicroSoft. Perhaps you've heard of them. They own.... you.

In the case of Allen, that sucks. Being owned by PaulAllen has been the kiss of death for many a venture - from numerous high-tech startups to a certain NBA team in Wiki's hometown.

Despite having a gazillion dollars in the bank, the PaulAllen-owned Oregon Arena Corporation, which owns the Rose Garden arena in which aforementioned team plays, recently filed for bankruptcy. Allen is now trying to use another owned-by-him to buy the arena out of bankruptcy court on the cheap, stiffing the creditors (a teachers' pension fund). However, said fund (itself with deep pockets) is fighting back - indicating it would rather foreclose on and run the arena itself (expect them to be a hostile landlord to their primary tenant).

And the sad thing is, all of this appears to be legal.

If you accept that the purpose of an incorporated business is to act as a fictitious person to absorb potential liability from business dealings, shielding the owners from direct liability, in order to promote commerce (this is the nominal purpose), and that inappropriate shielding can cause a "piercing of the corporate veil" to nonetheless hold owners liable in cases of illegal abuse of such protection - then what exactly should be changed to make what Allen is doing illegal?

Usually what's going on is that the bankruptcy court sells assets in order to give some nonzero return to principal creditors, and in theory this is supposed to be a neutral process. So in theory it's not supposed to matter who buys the asset; it is irrelevant if it turns out to be someone who previously held an interest in it.

If in this case Allen didn't make a bid, hypothetically perhaps no one would, which would hurt the creditors who were hoping to see some proceeds.

On the other hand, if some other interested party makes a higher bid, then Allen won't be able to get those properties after all.

That's just the way the system works, and in regard to what's being discussed, there's nothing obviously wrong with it.

Are you thinking that it's ironic? Sure, it sounds like it. Are you thinking he may get something cheap? Sounds like it, but in theory it shouldn't be "cheap" meaning "below market value", because if it were, he should be outbid.

Is it that you don't like the way bankruptcy works? The older alternative was debtor's jail, which really was not a good idea, no matter what the problems of the newer approach.

So the complaint here is far from clear.

I don't know the particular case, I'm just going on what is written above. -- dm

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