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Subject: Liquidation assets rss

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Howard Posner
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Hi,
When a company goes into liquidation ( as is going to happen bigtime in the game we are playing)the rules say to auction off the assets, and use whatever is raised to pay down debt and then distribute any balance to shareholders. What exactly are the sellable assets?
Trains obviously, but what about unplaced station tokens, stations already placed on the board in the name of the liquidating company, and private company advantages owned by the liquidating company?

Thanks,
Howard.
 
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Eric Brosius
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The assets (money, trains, tokens) are auctioned off in one big batch, not item by item.

Note also the rule that says the President of the liquidating company can only bid exactly $10 more than the current high bid.
 
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Howard Posner
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Thanks,

Presumably it is companies that buy the assets not players. Who starts the bidding? If (as with us) the President of the liquidating company is also the president of another better company it is in his interest to pay a decent price for the assets if the liquidating company has heaps of debt that will otherwise rebound on him as a player.
Hans will be reading this with interest too as a potential shark.

Howard
 
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Eric Brosius
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The bank starts the bidding with a bid of $0. Then it is the player to the President's left. So, if the President is the only one who wants to bid, the bank bids $0 and the President bids $10 and that's it.

Here's my summary from the Teaching Guide. It's not nicely formatted, but the Teaching Guide is, if you want to download it.


Sales process. For all three types of sale, the process is as follows. Each player who owns at least one company that is eligible to bid may bid, clockwise around the table:

• For a liquidation, place the company’s loans and cash in front of the President.
• The player to the President’s left makes the initial bid (in a liquidation, after an initial $0 bid from the Bank.) Bids must be multiples of $10, and for friendly sales must at least equal the minimum bid. Each player must raise or pass; a player who passes may not bid again in this auction. If the President of the company being sold wishes to bid, he or she must bid exactly $10 more than the previous bid.
• The high bidder identifies which of his or her companies is buying the company.
• If no one bids, the company goes on as before, unless it is in liquidation.
• Move any shares in the Treasury to the Open Market. For friendly sales, the Bank pays the Treasury for them at the current stock price.
• The buying company gets any assets still on the sold company’s charter.
• Discard any trains in excess of the train limit to the Open Market.
• Combine tokens as described above.
• The buying company may take loans and pays the bid. In a liquidation, the money goes in front of the old President; otherwise it goes to the Bank.
• The buying company may pay off any loans acquired. For each acquired loan not paid off, the stock price moves left 1. To have been eligible to make the purchase, the buying company must reduce the number of loans to no more than its loan limit.
• If the company was in liquidation, the old President now settles the loans, using the bid (if any) plus any money that had been on the charter.
o If there is not enough money to pay the loans off, the President makes up the difference (or faces a Cash Crisis.) Shareholders receive nothing for shares in the liquidated company and holders of short shares owe nothing.
o If there is money left after paying the loans off, remember the amount and then return it to the Bank.
• Shareholders and holders of short shares now settle up on a per-share basis. The value per share equals the purchase price (or the money left, if any, in a liquidation) divided by the total number of shares (2, 5 or 10) rounded down. Players receive this amount per share, or pay this amount per short share, from or to the Bank. A short share holder who cannot make the payment faces a Cash Crisis.
• The charter, regular and short share certificates, and tokens of the sold company are now returned for re-use.
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Travis Dean
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The players make the bids, not the companies. Go in clockwise order I believe. Win a player wins the bid, he then chooses one of his companies to pay the winning bid.

As Eric said, you cannot bid more than $10 above the current high bid, so if nobody else bids, you won't be able to win it for more than $10, even if you wanted to.
 
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Howard Posner
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Thanks everyone. It all makes sense. One last question. Is a station already on the board an asset that can be bought and rebadged for the buying company?
 
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Burster of Bubbles, Destroyer of Dreams.
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hposner wrote:
Thanks everyone. It all makes sense. One last question. Is a station already on the board an asset that can be bought and rebadged for the buying company?
Absolutely yes. Usually the most valuable asset.
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Burster of Bubbles, Destroyer of Dreams.
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Some players find it helpful to think of liquidation as a story of two buckets:

(0)
Bucket A: Cash and loans

Bucket B: Trains, privates (including unplayed coal and bridge tokens), loose placeable tokens, tokens on the board.

(1)
The bank bids $0 for bucket B. Going around the table PLAYERS bid for bucket B, not disclosing which of their eligible companies will close the deal. The owner may only raise by $10, other players may raise by any amount they choose.

(2)
When the auction ends, the winning PLAYER chooses one of their COMPANIES to execute the transaction, possibly taking loans to enable this. The cash goes into bucket A. Duplicate tokens in the same city pop loose and are placeable in subsequent operating rounds.

(3a)
If bucket A has less cash than loans, then the president makes up the difference out of pocket, possibly forcibly selling shares and/or going bankrupt.

(3b)
If bucket A has more cash than loans, then after the loans are paid off the remainder is divided among the shares, with shareholders getting money from the bank and shortholders paying money to the bank, possibly forcibly selling shares and/or going bankrupt.

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J C Lawrence
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A bankruptcy covering a short of a liquidated company is a beautiful thing.
 
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Paolo Russo
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Morganza wrote:

(3a)
If bucket A has less cash than loans, then the president makes up the difference out of pocket, possibly forcibly selling shares and/or going bankrupt.
Who's the president? The president of the company that acquired the liquidated one, or the old president of the liquidated one?
 
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Richard Clyne
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In a liquidation, the previous president is responsible.
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lychenus
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In simple laymen terms,

Lidqudation: the president screwed up the company, so he is responsible for all the crap (loans) he did, take away all the remaining money and the loans from the mat. The bank make the first $0 bid so the company is always sold. The reason is the company has run out of credit so everything sellable must go, the bank have enough of the company. Auction everything in one batch. The money gained is used to repay loans (must).

If the previous president cannot make up of the sin he made, auction the president himself. (bankruptcy)

Friendly Acquisition: or in laymen terms the company is sold at the current spot price. Everything is sold. If no bid is made the company is taken back. But if one bid is made, then all shares in the company is liquidated at current stock price. In another words, if the company is sold at the current share price, the company is only sold at the current price multiply by the number of shares sold. For instance, if there is 3 shares outside of the company (on player's hand or in bank pool) out of 5 shares at price of $50, one is only paying $150 despite the bid is made at $250. Since when bidden, the remaining 2 shares in the company would immediately be sold and become $100 to be place in the company. Those money when sold, would be first move into the buyer's company, then be paid out. So that $100 would not matter unless it is sold at a price higher than current price. If the bid becomes $300, those shares would not suddenly become $60 spot price, since it had been sold at $50 already.

The shares only matters in terms of percentage (%) to split the money made from the auction.

Friendly sales is extremely useful and under-used, commonly used in the follow situations:
1. get rid of the company at current price to remove the obligation to get a train for the company, right before or after a train rush.
2. to force the few shorter to clear their position at the current price.
3. to squeeze out cash from your company, or take a loan and move the company to you at the company's name.
4. some of the composition of above.

Hostile Acquisition (grey spaces): the company is simply at a bad state. Or in laymen or common financial term Suspension of trade No shares could be sold or bought, or shorted, since at the current state it has no value. At the penultimate of the M&A stage anyone could make a bid of $10, then the company would be sold. Almost like friendly sales, once bidden, the shares in the company would be sold immediately. However, unlike friendly sales, there is no price. Hence the price would be zero. The procedure is exactly like friendly sales, but just the share price is zero. And such auction is always done and forced. Unlike friendly sales that it is elective.

When the company is sold, the money gained is also split in terms of percentage (%) in shares held.

The grey suspension zone looks like hell, but it is still extremely useful when no one could afford all your company loans. In Hong Kong terms, a company with negative asset, who just could barely afford the interest. So you could make a company full of fucking loans and drives the interest all the way up to $60. And then leave that trash company there. Want it? Take it. I don't care.
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