What if, one as a bank owner, colluded with the management to erase a liability for the bank and harm the company shareholders in the process? The $10M bonuses were just legal payoffs.
I have no issue with the bondholders or even most of the creditors.
My issue is with Wells Fargo when they promised to buy the oil at $82 and reneged on that promise. I've looked at several of these BK. I got into this game because I did my DD in researching the companies' hedge positions. I bought these stocks long because if they were able to exercises those hedges, they would have been very solvent and profitable. My mistake was thinking that those hedges would be valid. What's hidden deep in the details of these BKs is that those hedges are canceled. This is why WF wanted these BKs.
It's one thing for a loan to go bad for a bank. In the fractional banking world, a bad loan isn't that bad and may be a good thing with the proper accounting, etc. Having to actually honor one's derivatives, that is an entirely different matter. This would have been a real purchase of real goods with real money. That hits a bank's RESERVE. Because of fractional banking a reserve loss costs about 10 times as much. The only way I know of to cancel these contracts is through BK, which can nullify ANY contract. WF didn't want to buy the oil (honor the contract) and forced many of these companies into BK to nullify those contracts.
In this case, Breitburn sold $82 hedges for less than $60 in this last quarter. WHY in the world would anyone do that? Who were these hedges (with an $22/barrel intrinsic worth) sold to? I'm guessing WF. Holding both sides of those futures contracts would allow them to cancel them. The $10M in bonuses was the payoff to make this happen.
You say, "Pay your bills.". I say, "Honor your contracts."
