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arder | 1 year ago

This was covered in some of the coverage much earlier about the bankruptcy proceedings. Essentially it's within the court's power to not only pay the creditors but to pay them interest on their losses if that's possible. That's obviously balanced against the rights of the equity holders to get back any value if there is any equity left. In this specific case the people with equity were: the fraudsters who ran the scam, venture capitalists. No one wants to pay off the fraudsters and the VCs would rather pretend this whole thing didn't happen (because it makes them look like drunken coked up degenerate gamblers on a weekend at Vegas) so everyone agreed the court should be generous with how they calculate the return to customers. Government entitires also have a claim for any fines or taxation or whatever, but they're relatively happy for the retail customers to be protected first too - but they care less about the equity getting wiped out.

My guess would be anything above what the customers get may well go out to government fines rather than returning to the equity holders.

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