> Risk free revenue to the VC.

How is that risk free? If the clinic goes bankrupt the VC will be on the hook for the rest of the loan. It’s not free money.

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jaggederest 3 hours ago | parent | next [-]

They're not so silly as to have any personal or professional liability, they probably spin up a special purpose vehicle or llc to hold the bag if it all goes south

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edgyquant 2 hours ago | parent [-]

No bank would agree to such nonsense

	▲	JumpCrisscross an hour ago \| parent \| next [-]
		It’s analogous to a mortgage in a non-recourse state. If the borrower defaults the bank (or non-bank lender) gets the leveraged company, but can’t usually go upstream.
	▲	xenadu02 26 minutes ago \| parent \| prev \| next [-]
		> No bank would agree to such nonsense Ohhhh a live one! Sir do I have a wonderful bridge in Brooklyn to sell you! :) Fun fact: banks fund this sort of nonsense constantly. I've asked about this before: why they do it. They must be making money I just don't know how. The LBO guys pay themselves massive management fees and dump the debt on the company so they walk away scott free. My wild guess was the banks offload the eventual IPO onto investors and so make their money on the IPO fees and funneling their own clients the dead-man-walking shares. But I honestly don't know.
	▲	estimator7292 2 hours ago \| parent \| prev [-]
		It's called "financial engineering" and banks and courts agree to it on the daily.

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CapitalistCartr 2 hours ago | parent | prev [-]

The usual arrangement for an LBO is to saddle the bought company, the vet in this example, with the debt,or spin off a secondary company from the vet with the poorest assets and most to all of the debt. It's all a scummy business.