These loans are intended to finance purchases that will quickly and reliably generate cash.
A business might use a self-liquidating loan to purchase extra inventory in anticipation of the holiday shopping season.
A default on a scheduled federal debt payment, caused by the governments lack of funds necessary to service its debt obligations, could spark a fire sale on U. Treasury securities, prompt a sharp fall in the value of the dollar, and launch a rapid flight to quality as investors and dollar holders flee to the perceived safety of other nations bonds and currenciesall culminating in a U. Raising the necessary tax revenue would, for example, siphon off significant funds from businesses and households, thereby slowing the wheels of commerce and reducing household wealth.
The debts still exist in theory, at least until the statute of limitations has expired, but there is no debtor to pay them, so they must be written off in practice.
Assets are distributed based on the priority of various parties’ claims, with a trustee appointed by the Department of Justice overseeing the process.
If that does not cover the debt, they will recoup the balance from the company’s remaining liquid assets, if any. These include bondholders, the government (if it is owed taxes) and employees (if they are owed unpaid wages or other obligations).
UPDATE FOR ALL G REIT INVESTORS All G REIT investors should have recently received a distribution check representing the first of three (3) distribution payments to be delivered in relation to the final liquidation and winding up of G REIT.
As ownership and control of the formerly government-owned assets move to the private sector, profit-motivated business owners and entrepreneurs gain incentives to employ those assets in ways that maximize their economic value.