>>Am I correct in thinking GBG is now debt free and penny less? Without anyone to manage the company.
As a follow up to this question, there are certain rare instances where a complex corporate structure can lead to a decent payout when a parent holding company winds up almost pennyless but mostly debt free. Oilsands Quest is a great example, and it also happens to be a Canadian company (don't buy the shares - their plan has already been confirmed and the monitor has indicated they will distribute cash via record holders on the confirmation date, which has long since passed - that's a whole different effed up problem that can creep into bk investing). The legal term at question is 'substantive consolidation' - sometimes cases are substantively consolidated and sometimes they are not - it all depends on how well mgmt maintained the books when the company was operational. I'll explain how Oilsands worked because it provides a great example of how GBGLF won't work. I'm going to use round numbers from distant memory. All of Oilsands operations and basically all assets were held in a subsidiary of the corporation in which public shareholders held shares. The sub had let's say 100 million in debts. The assets were basically sold for about 10 million. A seemingly clear case of shareholders being up poop creek. If you looked at the SEDAR filings, it showed 100 mm of debt (again, maybe it was 50, I don't completely remember). But it was all trade payables at the sub level, and consolidated out of the quarterly financials was a 100 mm loan from the parent to the sub. So when the sub sold it's assets for 10 million and it came down to determining how to split that up, there was 100 million of payables to outside creditors and 100 mm of loans from the parent. Outside creditors got 5 mm and parent got 5 mm. Parent basically had no debt, so shareholders of parent will split the 5 mm, probably later this year (but only holders of record from several months back, as it appears). So that's how it can sometimes work that even a crappy sale for pennies on the dollar can still benefit the vulture investors who scarfed up shares for .002. The problem with GBG in addition to the secured debt (aka death-vice), is that GBG issued debentures guaranteed at the parent level. There will be a lot of trade debt at the Southgold level that gets lopped off via this Wits deal, but way too much will survive at the parent level where you guys are last in line. You guys can call this bashing or whatever you want - buy more if you are sure my presence here is part of some grand conspiracy - I follow bankruptcies, both successful ones and unsuccessful ones - has anyone here ever heard the term 'survivor bias' (aka Survivorship bias)? Anyone who still doesn't get why anyone would follow a losing prospect, might be something worth checking out on google.
