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August 25th, 2011, 00:16
Originally Posted by aries100 View Post
Isn't there also a difference in the US if you declare chapter 7 or 11? (of some law or bill).
There may be. United States bankruptcy law has multiple chapters, some of which apply to individual bankruptcy and some to corporate bankruptcy. I think there are different variations for companies that are trying to reorganize and shed some of their debt while remaining in operation and companies that are just shutting down. In the former case what usually happens is creditors exchange some of their debt for an equity stake in the reorganized company, in the hopes that the company will achieve success in the future and they'll get more of their money back. In the shutdown case it's all about liquidating assets by selling them off and using the proceeds to pay off creditors in a legally-mandated priority order.

I guess that the 401k money is pension money for the workers? or some other government regulated stuff? And I'd guess it is illegal to use this money to pay wages with? in the US at least…
401ks are a type of defined-contribution retirement plan. (The number comes from the law which created them.) Basically, each employee has the option to contribute a self-selected percentage of his salary to his '401k plan'. These contributions are exempt from income tax. Many companies will 'match' the contributions up to some level. The contributions are typically invested in a user-chosen set of mutual funds -- the exact selection of funds varies from employer to employer, but there are generally a number of stock index funds, corporate and government bond funds, a money market fund, a couple of foreign funds and a handful of age-linked blended funds. (My employer's plan actually has an option allowing for investment in individual stocks, although I don't know how common that is.) Profits from the investments are reinvested and compound over time. Income tax is paid on withdrawals from the 401k when the employee reaches retirement age.

It isn't entirely clear to me which '401k funds' were misappropriated in this case, but the most likely candidate is the company matching funds. Those would be considered part of the employee's compensation, and misappropriating them would probably be like misappropriating salary.
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