[hotnfresh]

What are the magic words these people use to get a bank to give them millions of dollars, let them walk off with it, then eat the loss?

[voisin]

The debt likely wasn’t a normal bank, and the interest rate was likely quite high. The parties making the loan were likely fully aware of the risk and thought the interest rate appropriate compensation.

[teo_zero]

Are those banks the same that failed to recognize what a bad idea it was to bet on sub-prime loans before 2009?

[IAmNotACellist]

Those WERE a great idea--as long as you weren't the one caught holding the bag

[chongli]

What I don’t get is why we don’t consider it fraud to knowingly take a loan you have no intention of paying back.

[gruez]

1. It is fraud

2. Is there any evidence that's ever the case from PE firms? Startups fail all the time, but I wouldn't characterize them as "knowingly take a loan you have no intention of paying back"

[refurb]

It's call "high risk debt". The high interest rate offsets the likelihood of default.