Tuesday, April 27, 2010

Strange Math

I'm not an expert on corporate bankruptcy, but the whole purpose of it is to reduce/restructure the debt. With that done, the cash flow situation improves and hopefully the business can thrive.

So Lyondell is now coming out of bankruptcy, but some of the reports are really making me question if I understand math correctly. This report (courtesy of the Urethane Blog) states near the bottom that the proceedings were costing the company $50 million a month, but at the same time, the total debt was reduced by about $17 billion.

Since they were in bankruptcy protection since January, 2009 that is 16 months. So how can reducing debt by over $1 billion/month while costing you on $50 million/month be a bad deal?

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