Quote:
Originally Posted by Chris
Yup ... so the ‘owner’ of the business has become the owner almost entirely with someone else’s money, which sounds fine on paper because that’s what a mortgage is, however the level of debt racked up there was clearly unsustainable. A leveraged buyout is still supposed to leave a business able to trade, unless there’s a deliberate underhand plan in play for the directors to milk it dry and then collapse it. Not saying that happened here but it has been known to occur in similar scenarios.
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That level of debt is not necessarily unsustainable in normal trading conditions. However, when you've got monthly interest payments to make but no income to make them with then you're stuffed.