As a former restructuring and bankruptcy advisor at Lazard, I can recognize the signs of a company in distress. And it’s a pretty obvious tell that there’s financial trouble brewing when a company stops paying its bills.
Elon Musk could lose 99% of his wealth this month, then 99% of his remaining wealth next month and still be better off financially than 99.99% of everyone. He’s not ever going to experience financial distress.
The issue is, that rich people take on lots of debt with their assets as collatoral (e.g. Musk taking a loan from the Saudis for buying twitter). If Musks collatoral suddenly vanishes (s.g. Tesla breaks down within a month), then the massive 10 billion USD debt will still be there. And then he’ll be very very much in negative wealth.
Your assumption is personal or personally guaranteed debt, but the loan was likely (based on my reading the term sheets leaked) to the new entity that was going to purchase/merge with the pre-existing Twitter. That potential negative net worth wouldn’t be tied to Musk but the entity we now know as Twitter. Musk would not be in financial distress.
Edit: I may have misread what you wrote. The value of Tesla, Twitter, and SpaceX could go negative and Musk would still be wealthier than 99.99% of the world because personal guarantees are unlikely to be attached to that debt.
Elon Musk could lose 99% of his wealth this month, then 99% of his remaining wealth next month and still be better off financially than 99.99% of everyone. He’s not ever going to experience financial distress.
Well, yes and no.
The issue is, that rich people take on lots of debt with their assets as collatoral (e.g. Musk taking a loan from the Saudis for buying twitter). If Musks collatoral suddenly vanishes (s.g. Tesla breaks down within a month), then the massive 10 billion USD debt will still be there. And then he’ll be very very much in negative wealth.
Your assumption is personal or personally guaranteed debt, but the loan was likely (based on my reading the term sheets leaked) to the new entity that was going to purchase/merge with the pre-existing Twitter. That potential negative net worth wouldn’t be tied to Musk but the entity we now know as Twitter. Musk would not be in financial distress.
Edit: I may have misread what you wrote. The value of Tesla, Twitter, and SpaceX could go negative and Musk would still be wealthier than 99.99% of the world because personal guarantees are unlikely to be attached to that debt.