That wouldn't happen in this case because there would still be residual value in the equity. Is Twitter worth $45bn? No. Is Twitter worth more than the $13bn in debt? Yes.
In this case, they can file, rollover the debt into a new company with no financial loss and then recap the equity with Musk (who obviously has the money to do so) and other shareholders.
Also, the banks who own the debt do not want to run Twitter. All they want is to be able to mark the loan as performing...that is it. In cases where debtholders take over the company, the debt has usually been sold for significantly less than par to someone who wants to run the company. This isn't the case here because the debt is still worth par (imo, largely because it is obvious that a recap would be straightforward...it may be the case that Twitter's financial position is significantly worse, but we will need to wait and see).
Obviously, the question for the leases is how much it is, whether it is worth it, whether the landlord thinks they can get a new tenant (unlikely at this point), and whether the company can be relocated...the lease would have to be a rather large proportion of expenses to make this all worth it...but it may be worth it if the company is going to recap anyway (which seems likely).
Just because someone payed that amount doesn't mean that it's worth it. It's only worth what people are willing to pay, which AFIK is now way less then before musk bought it.
Part of it is that due to the (IMHO absurd to be legal) financial instruments Musk used to loan (part of) the money used to buy twitter, twitter has now a pretty high financial burden. Means it now has to earn much more to be profitable then before. (It was something which you could oversimplified describe as Musk taking out a lone in the name of twitter before being able to represent twitter to buy twitter..., in practice it's more convoluted then that but it's kinda similar.)
Through in the broader picture this specific case of Twitter is more then an indicator for something being wrong, like either impending Bankruptcy, him doing improper business and being very untrustworthy or him crippling the operations department to a point where Twitter has lost overview about what they need to pay where.
And look at HY indexes. The marks that have been in the media are roughly where other HY bonds have moved. Banks have bids but they are seeking bids from hedge funds that trade in distressed debt, who are obviously going to bid with a markup (the same thing happened with British corporates a few months, because pension funds had to sell they had to take bids from hedge funds so the bonds went from 100 t0 90 for AAA securities because there was no bid, you had private equity funds trading at 70p in the £1 on money-good securities). The secured portion is down 10%...that looks about right based on HY indexes.
The 50% markdown that Fidelity is taking means that it is worth more than $20bn. Classic HN.
> The 50% markdown that Fidelity is taking means that it is worth more than $20bn.
Care to explain? When the debt is already being marked down, how does the equity have any positive value? (other than maybe extreme variance, but I still don't see how that gets anywhere near 20?)
Anybody taking over Twitter will have years of work ahead of them to rebuild trust with advertisers, let alone addressing the core problem of growing user numbers. That was Musk's original job, which is not going well, even after he reinstated pillars of society like Andrew Tate and Trump.
If Twitter fell like every other social media, it would have barely been worth $20B when Musk closed the deal. Add the mass destruction Musk has wrought, coupled with the fact that the debt holders have been trying to offload the debt at a discount, and there is a very real probability Twitter, if independently valuated, is worth less than the debt.
In this case, they can file, rollover the debt into a new company with no financial loss and then recap the equity with Musk (who obviously has the money to do so) and other shareholders.
Also, the banks who own the debt do not want to run Twitter. All they want is to be able to mark the loan as performing...that is it. In cases where debtholders take over the company, the debt has usually been sold for significantly less than par to someone who wants to run the company. This isn't the case here because the debt is still worth par (imo, largely because it is obvious that a recap would be straightforward...it may be the case that Twitter's financial position is significantly worse, but we will need to wait and see).
Obviously, the question for the leases is how much it is, whether it is worth it, whether the landlord thinks they can get a new tenant (unlikely at this point), and whether the company can be relocated...the lease would have to be a rather large proportion of expenses to make this all worth it...but it may be worth it if the company is going to recap anyway (which seems likely).