Creative Destruction in Small Business Bankruptcy | Hacker News Reader

Creative Destruction in Small Business Bankruptcy

creditslips.org

27 points400thecat13 comments

One of the greatest things about the USA is that entrepreneurial mistakes are forgiven and you're given another shot. It is why we are the greatest nation when it comes to startups and entrepreneurship in the world.

The privatization of profits and socialization of losses.

This is why taxes are important. They are the socialisation of profit. People should be able to take a risk... but they should also payback the institutions that facilitated that risk.

We need more tax enforcement on the rich and big companies.

As it is now they don't really pay taxes as they have army of accountants to figure out ways around taxes.

In germany bankruptcy (in the anglo-american sense of "resetting" all obligations) is only possible after a 3 year period[1] in which the debtor has to give up all income beyond a certain limit to the creditor.

Even this is only due EU regulations, which limited this period to 3 years, before it was 5 years.

[1]: https://de.wikipedia.org/wiki/Privatinsolvenz#Ablauf_und_Zie...

Student loans cant be bankrupted out of.

Big biz can "learn from their mistakes" but not a 19 year old college kid.

The big killer in the UK is the inability to get rid of business leases, largely because landlords can still force exemption from the legal protections. The second is lenders who can insist on 'directors' personal guarantees' at every turn - which puts their family homes on the line.

If there is one thing the UK could do to boost business startups, it would be to ensure that business owners can hand back leases whenever they want, and that 'directors guarantees' are unenforceable.

However in a country that remains obsessed with land and titles, that is unlikely to happen.

At least you have one of the best personal bankruptcy laws in the world?

Some Polish business guides used to tell you to be prepared to move to UK if your business in Poland doesn't work out. You will still lose everything, but at least you won't be chased by debt collectors for the rest of your life. This probably isn't true after Brexit though.

Would you take the other side of those deals?

They said the same about limited liability corporations about 200 years ago.

Once the regulation is in, property owners and lenders would have no other choice.

All banks demand a big hole punched through your LLC with a personal guarantee as a condition of granting a loan. They have very little effect on lenders.

Aren't there lenders in the UK that don't insist on 'directors personal guarantees'?

They probably just lend at much higher rates.

But we need creative destruction in big businesses

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