DP - Shoreham was barely on the radar screen of debt compared with the rest of the eranicous portfolio which is not aviation related and certainly not enough to call in the administrators - but it was the one with no value but immediate ongoing costs....
JS,
That makes more sense, and would be as I expected. But obviously that other debt didn't come from profitable subsidaries
(You originally said that Shoreham was the only loss making asset.)
Justiciar,
This ignores the fact that in many groups there will be inter-company guarantees and composit guarantees and debentures in favour of banks and other lenders, so if there is external borrowing every company in a group will be a guarantor of the borrowing of every other company. This will result in a holding company being hit by, say, an insolvency of one of the subsidiaries and triggering the Holding Company's need to appoint an Administrator.
It does not ignore that fact at all. While such guarantees are not uncommon, they are rarely accepted when there isn't enough assets to back up the guarantee.
If all the subsidaries bar Shoreham were profitable, then it would be nothing short of gross incompetence to allow Shoreham to generate enough losses in such a short period of time to bring the whole group down. The other subsidaries must have been loss making too, and to a much bigger extent than Shoreham.
JS says that the rest of the group had massive debt apart from Shoreham. Where did the debt come from if those other elements of the group were profitable?
It simply can't happen in such a way.
The statement
but the only asset eracinous had that was loss making was Shoreham
simply does not stand up.
dp