[jacquesm]

As long as you still own DroppedBox, no problem. But if you divest DroppedBox you'd better hope there isn't any dispute once that chapter 7 hits about the price you made for it and/or any ties of investors and or principals from 'DropBox' with those of 'DroppedBox'.

Really, bankruptcy fraud is nothing to joke about, it is a very common trick to try to remove assets from a company that is on the skids but it usually does not end well.

If you divest the whole then that's perfectly possible but you're going to be under a microscope if you declare bankruptcy a very short time later.

See also 'clawback'.

[ChuckMcM]

I completely agree with you that using bankruptcy to defraud your investors, but as @angersock points out quite humourously, there are people who make their money just on the inside of "perfectly legal". Look at some of the more creative use of the bankruptcy code at Onlive.

And since there are millions, perhaps billions of dollars worth of company at play here, the top people in this game get involved. And that is what makes it interesting. Sadly much of it won't happen in public because they are private companies.

[jacquesm]

There are even tons of people that make money just outside of perfectly legal and lots of them well into illegal! That doesn't make any of that ok though and you're definitely inviting scrutiny with such actions.

It is definitely interesting but as someone who helped someone else deal with the fall-out from a bankruptcy where the management made use of these 'technicalities' to defraud creditors I can tell you that in some cases it can end very bad for the people pulling those tricks.

In that case the sale of assets happened months before the bankruptcy but the fact that they could have reasonably known it was coming was all it took to get a judge to nail them to a tree. I'm pretty sure that if there are billions at stake that the 'smartest boys in the room' will have a trick or two up their sleeve that they can defend is entirely legal (even if at least morally bankrupt) but even being that smart doesn't always work out well and people end in jail.

[ChuckMcM]

We can only hope. I'm a big fan of punishing people who abuse the system in that way, but I prefer taking their gains and redistributing it to the people they took from rather than putting them in jail. I'd much rather have them scraping by trying to make ends meet at a transient hotel than living in jail cell at tax payer expense.