No. of Recommendations: 2
From BRK website 4/27/23
BERKSHIRE HATHAWAY INC.
NEWS RELEASE
FOR IMMEDIATE RELEASE April 27, 2023
Omaha, NE (BRK.A; BRK.B) '
On December 14, 2007, an indirect subsidiary of Berkshire Hathaway Inc. acquired the equity of
Whittaker, Clark & Daniels, Inc., Brilliant National Services, Inc., L.A. Terminals, Inc., and Soco
West, Inc. These companies had ceased their operations in 2004 and sold all their operating assets
prior to the acquisition, though they continued to face liabilities arising from asbestos, talc and
environmental claims. No Berkshire company ever operated, or had any involvement in, the
manufacturing and chemical operations that gave rise to the companies' liabilities, and no Berkshire
insurer issued it any insurance in connection with the acquisition. On April 26, 2023, these companies
filed voluntary petitions under chapter 11 of bankruptcy code in the United States Bankruptcy Court
for the District of New Jersey.
Anyone know what's going on?
No. of Recommendations: 19
I have no idea and no data at all, but I can speculate at length:
When acquired, the firms had a lot of liabilities of wildly unpredictable magnitude, so they weren't allowed to declare bankruptcy.
The claims against the acquired firms have finally wound down to the extent that Berkshire is now allowed to put them into bankruptcy, drawing a line under further liabilities.
Perhaps in conjunction with a capped guarantee from Berkshire itself for the small remaining tail.
Since the firms had ceased operations prior to Berkshire having acquired them, it would be interesting to know what the assets were.
They weren't operating assets, so I'm guessing it was a pile of cash or securities (and maybe insurance policy interests) that had been earmarked for the liabilities.
Maybe Berkshire was pretty sure the liabilities would ultimately be less than the assets acquired so thought it a good deal to buy the companies, presumably for a song, to get the excess assets and secondarily the time benefit of the float acquired.
See? You don't have to be a chatbot to make stuff up.
Jim
No. of Recommendations: 11
I don't know much more than Jim on this bankruptcy, but I believe these corporate shells ran out of the the money they came with, which Berkshire was able to invest in securities, while still having significant liabilities to pay and unresolved cases still out there. Rather than let the next few judgements "win" everything that was left, they felt it was more equitable to divide what is left more evenly among everybody in line. The timing of this filing was based on a March 6th jury verdict awarding $29 million.
I don't know why Berkshire, specifically Ringwalt & Liesche Co, bought the corporate shells but they probably knew at the time the worst case scenario was for the shells to run out of funds and file BK.
Free Bloomberg article with some details here:
https://www.bnnbloomberg.ca/talc-supplier-to-cosme...
No. of Recommendations: 1
"See? You don't have to be a chatbot to make stuff up."
I think it is by far the most distressingly human characteristic of chatgpt, frankly.
