> I like the theory that he's planning to discharge all of the debts he's run up in one fell swoop with a bankruptcy filing.
And that theory is incorrect. If Twitter goes into bankruptcy, the shareholders are wiped out. Ownership goes to the banks. He could be trying to drive the cost of the debt down (supposedly already down 40% on the open market), so he can buy it. But, the banks aren't stupid. He will absolutely have to pay a premium to buy it back.
There is another card Elon could play - which is not pay the loan and force the banks to declare bankruptcy. Do the banks really want to own Twitter? Can they kick out Elon, get competent management and somehow make themselves whole on the loaned money? That's certainly a scenario, but one that can't look appealing to the banks.
If the banks seize Twitter, do they really have to own and operate it? They only need to be able to flip it for at least the value of the $13B liability it collateralized, plus whatever associated legal and tax costs. Twitter is probably not worth $44B anymore but supposing they can seize it before its users and assets and brand have all gone to zero, I imagine that there is someone somewhere who is willing to gamble $13B for the opportunity to own Twitter, pick up the pieces and try to restore their credibility and value prop, and try to take it public with at least a $20B valuation so they can cash out at a nice profit.
If I recall the Matt Levine newsletter correctly the banks have already discounted the debt so I would think they'd be happy to sell it for less than the original $ value, either to Musk or Musk associates.
As I mentioned, it's already down 40% last I saw. And they will take less, but they aren't going to give it away. One, it sets a bad precedence, and two it's bad business.
ML also mentioned he hoped Twitter would stiff the banks on the first interest payment like they have been doing all their other creditors. It would have been an entertaining game of chicken. The other unknown is if Elon really wants to dump more money into this, though he may feel pot committed. But what if he realizes there is no winning option?
And that theory is incorrect. If Twitter goes into bankruptcy, the shareholders are wiped out. Ownership goes to the banks. He could be trying to drive the cost of the debt down (supposedly already down 40% on the open market), so he can buy it. But, the banks aren't stupid. He will absolutely have to pay a premium to buy it back.
There is another card Elon could play - which is not pay the loan and force the banks to declare bankruptcy. Do the banks really want to own Twitter? Can they kick out Elon, get competent management and somehow make themselves whole on the loaned money? That's certainly a scenario, but one that can't look appealing to the banks.