Replies to post #14365 on Fannie Mae Preferred S (FNMAS)

[rosen62]

which cannot happen while the companies are profitable

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I think that depends on either a liquidity issue or an insolvency issue, not earnings. Right now, companies are solvent and liquid due to Treasury's funding commitment. It has not been canceled. But if it is canceled the companies have little to no net worth to rely upon and would be technically illiquid. In fact, Paulson called the commitment the "ultimate liquidity backstop".

[KylieM]

Legally a solvent company can be liquidated by, for instance, court order on the grounds such as public interest and doing justice. I have to say it is very rare though.