How right, Mr. Bernie Sanders is, when he tweeted at Click here, if you wish to have a look at: https://twitter.com/SenSanders, about the Seers bankruptcy. He has also added a detailed report by Prospect.org Click here if you wish to have a look at http://prospect.org/article/how-sears-was-gutted-its-own-ceo?fbclid=IwAR0sBwpOijKsBdlZYOl7_t2QI362GYdQRIL7PUhmA-f3Zet9cVo75buemic. The title of this detailed Article is "How Sears Was Gutted By Its Own CEO". This characteristic Corporate Culture of Promoters/present Managers of Corporates looting and hollowing out the Corporates they manage, is a global phenomenon. Working Class, especially the workers of the looted Corporate, and also the Workers of other Creditor Corporates ought to be alert to these developments. As far as possible, they have to predict and foresee the incipient sicknesses in their Organisations sufficiently in advance instead of waiting till a Bankruptcy petition is filed. For learning this alertness, they have to study not only Balance Sheets, Financial Result Statements such as Trading and Profit and Loss Account, Cash Flow and Funds Flow Statements, but also compare what are depicted in them to the actual position prevailing at Field Level.
How Vulture Capitalists hollow out a Company!!!
Bernie Sanders
Verified account @SenSanders
The Sears bankruptcy is yet another example that our economy is rigged for a powerful few at the top. Vulture capitalists have hollowed out a company to line their own pockets. It's time to build an economy that works for all of us, not just the 1%.
The Prospect.org Report which detailed the Hollowing out of Seers by its CEO Mr. Lambert, opened with the lines:
Eddie Lampert not only ran the company; he was also its largest creditor and the guy who sold major Sears assets to … Eddie Lampert.
.... The company that pioneered the 20th-century version of e-commerce—the catalog—did not succumb to 21st-century innovations like Amazon and Walmart. Rather, it was dismantled piece by piece by Eddie Lampert, the hedge fund titan (and former Yale roommate of Treasury Secretary Steven Mnuchin) who purchased it in 2005. Lampert and his hedge fund engaged in relentless financial engineering to suck out all the value from Sears and leave a desiccated husk, which now could face possible liquidation in bankruptcy.
Fate of Seers' Employees
"...Meanwhile, the 175,000 workers who lost their jobs at Sears and Kmart over the last decade, and the 68,000 employees whose jobs are at risk today, have next to nothing to show for it. ..."
Question: Can you estimate the Hollowing out of Indian Corporates done by Indian Corporate Promoters?
Ans: Frankly, I do not know. We can only make guesstimates. As on date, at least, ten lists will have to be prepared. Of course, to start with, there will have to be a Cut-off point to separate High Value Companies and Low value Companies. As a beginning Companies which default amounts exceeding amounts $100 million (say Rs. 750 crore or Rs. 7.5 billion) can be prepared.
Their Defaults to Creditors also need to be shown under three Columns: 1) Defaults to Public Sector Banks 2) Defaults to Private Sector Banks 3) Defaults to Govt. (taxes etc.) and Employees (Wages) 4) Defaults to other Creditors.
Important related links before we start further analyses:
Click here if you wish to go to : https://economictimes.indiatimes.com/tech/hardware/did-you-ever-think-of-an-ambani-company-going-bankrupt/articleshow/64190348.cms. --This News Report dated 18th May 2018, has, so far, attracted 164 comments. Some of these 164 Comments made by Small Investors, Intelligent Readers, are really valuable.
Click here, if you wish to go to https://economictimes.indiatimes.com/news/economy/policy/modi-government-plans-smart-move-in-its-war-on-black-money/articleshow/65755394.cms.
Question: What is the use of raking up this issue now?
Ans: Prevention is better than Cure. Losses which may arise from Indifference and Negligence of Stakeholders: 1. Employees may not get salaries for months together. 2. Public Sector Banks will pile up NPAs. 3. Foreign Investors, both Direct Investors and Portfolio Investors will not get dividends. 4. Indian Small Investors burn their fingers when Companies get hollowed out and when the Information becomes Public. 5. State and Central Governments will not get their tax collections. 6. Ancillary Units will lose their Markets for their supplies.Question: Suggest some solutions:--
Ans: 1) To start with, Inventory Audits (Stock Audits) will have to be carried out for all large Companies by Independent Audit Teams appointed by Creditors and Employees.2) Diversion(s) of Funds, both Bank Loan Funds, and other Funds of the Companies, in the name of Inter Corporate Investments are vary rampant. Every cheque exceeding Rs. 10 lacs (1 million) and every cash-out-go exceeding Rs. 1 million are to be keenly scrutinised by Independent Surveillance Teams, whether appointed by Financing Banks or Government or any other Institution.
3) Sebi Scrutiny on the basis of the Returns and Statements submitted to them will not be sufficient.
4) "Limited Liability System" DOES NOT appear to be working well in the Indian Corporate Environment.
5) Public Sector Banks, till their NPA Levels are brought down to manageable levels, should not extend fresh Credit to New Companies incorporated with "Limited Liability". Enhancement of Existing Loan Limits to Existing Limited Liability Companies will have to be pre-scrutinised by an Independent Government Regulatory Authority.
6) At least part of the Working Capital Loan Limits granted to Limited Liability Companies , should be extended on "Lock & Key Basis" and "Factory Type" basis. Leaving everything to "Hypothecation" will facilitate frauds by unscrupulous borrowers. However, bringing everything into-under the purview of Lock & Key will not be possible. At the sametime, why do Corporates require 100% of their stocks under their Control?
7) Use of "D.P." System (Documents against Payment. L.R.sand R.Rs will be routed through Banks.) has gone out of vogue. It is to be restored.
To continue adding / deleting / modifying.
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