Quote:
Originally Posted by golfing eagles
Partially correct.
The "overpayments" were identified many months BEFORE the bankruptcy filing---last year, in fact. The "payback (with interest and penalties)" is probably the main reason for the bankruptcy filing.
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So how does an owner get money out of an owned company?
1) the owners can put debt on the acquisition, which means that the company constantly owes money to the owner.
debit cash
credit debt amount
2) the owners can pay themselves by dividending cash from the company to the owners.
credit cash
debit dividends to parent
These two ways are how the cash "disappears" from the company, all legal.
So the owner can drain the cash from a company with dividends, which then makes them insolvent, and can declare bankruptcy, in this case, the repayments and interest to CMS is bankrupting the company, along with the owners most likely dividending themselves cash prior to losing it all to the government.
If a solvent company is sold, the cash belongs to the seller's, so that the selling owners dividend themselves the cash, and the purchaser must capitalize the company with cash, creating debt on the company.
That's the accounting processes here at work. I do not know the specific case particulars, this is just the legal accounting processes which are all legal, to a point, criminality is a different issue. .