The Path To Profitability: Ignore Your Debt

from the one-way-to-do-it dept

VCs today love to talk about how companies need a "path to profitability" to be fundable. It seems that more companies are taking the Yipes approach to profitability: raise lots of money, then declare bankruptcy, and wipe your debt off the books. It's a plan that Covad seems mighty proud of. They're touting how they did so well last year because they simply erased $1 billion in debt. Wouldn't life be easier if we could all do that? Take on over $1 billion in obligations. Screw up your business, spend a couple months in bankruptcy and emerge owing nothing. What a deal.

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  • identicon
    Ed, 27 Mar 2002 @ 10:15am

    question

    Are the books completely closed on a corporate bankruptcy like that? It seems that the people who were owed that $billion might want the terms of the bankruptcy reexamined given that the company made a profit of $344 million this year.

    reply to this | link to this | view in chronology ]


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