Business Bankruptcy

11 Dec Own Stock in an ESOP? You Could Be Lender!

Employee Stock Ownership Plans are popular at many larger public companies. One reason is because employees will have a stake in their company and want it to succeed. But another reason is that it helps get cheaper loans. A large company borrowing money directly from a bank can deduct the interest on a loan from its taxes. If it "launders" the loan through an ESOP, then it not only gets to deduct the interest but also the principal payment! If the corporation is in the 34% tax bracket, that's means a hefty savings that may (if the rates are very low) work out to a free loan. Great for the company, not necessarily so great for the employees.
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08 Feb American Home Bankruptcy: Consumers Still Can’t Catch a Break

Just because your mortgage servicer is bankrupt and your loan is nearly worthless to other lenders, don't expect you'll catch a break. That's the lesson coming from the latest round in the American Home Mortgage bankruptcy. As we have noted before, American Home Mortgage Investment Corp. is in bankruptcy in Delaware. Part of the case now involves the company selling off its loan portfolio to pay back creditors. A sale of a pool of 424 mortgages is scheduled for February 26th, with a face value of $152 million, according to the Associated Press. The loans will be sold at a steep discount in the current bear market.
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