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1862: Railway Mania in the Eastern Counties» Forums » Rules

Subject: Can a company in receivership be refinanced? rss

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Mad Dog
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As a relatively new 18xx player I'm really enjoying this game.

Question: can a company in receivership be refinanced to buy a train? I can't see anything in the rules to prevent this; indeed it's almost implied that it's forced as the company will need to buy a train to avoid bankruptcy. If it is legitimate it seems even more powerful potentially than normal refinancing. Charter a company, start it low, get a load of trains, pump up the price, sell all but one share before the trains rust, buy more companies with the profits, refinance the one in receivership, etc.
 
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Eric Flood
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Mad Dog UK wrote:
As a relatively new 18xx player I'm really enjoying this game.

Question: can a company in receivership be refinanced to buy a train? I can't see anything in the rules to prevent this; indeed it's almost implied that it's forced as the company will need to buy a train to avoid bankruptcy. If it is legitimate it seems even more powerful potentially than normal refinancing. Charter a company, start it low, get a load of trains, pump up the price, sell all but one share before the trains rust, buy more companies with the profits, refinance the one in receivership, etc.


From the rules:

Quote:
it will not build track
or place station markers, must retain revenue if it can, and will buy a train if it can afford to, subject to
the normal restrictions on buying trains. Note that if a company in receivership has no train at the end
of its operating turn, and cannot afford to buy one, it goes bankrupt immediately.
If a company in receivership buys a train then the it will be a type for which the company holds a
permit. If the company holds more than one train permit card, then the train type will be the first of
Express / Freight / Local, for which a permit is also held by the company.


So if they need to buy a train but cannot without selling/refinancing, they do nothing else but go bankrupt immediately.
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Mike Hutton
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Please see Ch 8, para 2, last sentence: "Note that if a company in receivership has no train at the end of its operating turn, and cannot afford to buy one, it goes bankrupt immediately."

So no, it can't refinance - it goes bankrupt before it gets a chance to.
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Mad Dog
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Thanks. I think my confusion was down to when exactly the operating turn was considered to end. Under 7.1, "When a company operates" there are various steps listed, and Purchase Trains is one of those steps.

Is it legitimate to sell a company down to 3 shares, then refinance it, even though the refinancing would then take the company into receivership? Or is the minimum holding required for refinancing 5 shares (to enable directorship to be maintained after the refinancing)?
 
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Mike Hutton
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You can indeed sell down to 3 shares and refinance. The process of refinancing (if successful) allows the company to buy a train, and thereafter it is in receivership until someone decides to buy back up to 3 shares.
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Lance Harrop
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Mike Hutton wrote:
You can indeed sell down to 3 shares and refinance. The process of refinancing (if successful) allows the company to buy a train, and thereafter it is in receivership until someone decides to buy back up to 3 shares.


I actually did that in my last (twenty-second) game when Tom bought two F's and a G's in one OR.

Since the company ended up with an 'H', and there weren't enough stocks to go around, everybody ended up buying up the company in the last Stock Round.
 
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