<story><title>Santa Barbara&apos;s collective memory, sold for kindling</title><url>https://www.independent.com/2024/03/29/santa-barbaras-collective-memory-sold-for-kindling/</url></story><parent_chain><item><author>KennyBlanken</author><text>&amp;gt; The paper declared bankruptcy on July 21, 2023. In a fitting final insult, the court filing listed more than $116,000 in company assets — an implausibly low valuation — as it was revealed McCaw had previously shifted the real estate property of the newspaper’s historic De la Guerra Plaza headquarters and Goleta printing plant into private LLCs under her control&lt;p&gt;This is also a very standard play in the private equity field. The property (which is usually what they really wanted) is forked off to a different entity, and then that entity charges rent back to the original corp.&lt;p&gt;This is how they kill off assisted living homes. They don&amp;#x27;t bother with cost-cutting; they just keep jacking the &amp;quot;rent&amp;quot; the property-owning corp charges the assisted living facility entity. In desperation to keep the home for residents, the staff cut every cost they can. Cracks in care quickly appear, everyone who can leave does which means lots of lost cash flow and expenses split among fewer residents...at some point there&amp;#x27;s just no more squeezing possible, the corp misses a rent payment...and that&amp;#x27;s that.&lt;p&gt;It&amp;#x27;s also the classic plot for many stories; gang&amp;#x2F;army strong-arms a village and keeps asking for larger and larger takes of the village&amp;#x27;s crops, eventually leading to the villagers starving, etc.</text></item></parent_chain><comment><author>lotsofpulp</author><text>&amp;gt;  The property (which is usually what they really wanted) is forked off to a different entity, and then that entity charges rent back to the original corp.&lt;p&gt;The IRS treats the owner’s basis in an entity differently based on being a business or passive activity. Included in basis for a passive investment is both recourse and nonrecourse debt, while the basis in a business such as a newspaper takes into account the recourse debt.&lt;p&gt;If the business and passive activity are not separated, then if the owners refinance the asset with non recourse debt and distribute additional proceeds, it is a capital gain since the non recourse debt does not increase each partner’s basis.&lt;p&gt;However, if you separate the business activity and passive activity, then the partners can include all the non recourse debt in their basis, and any distribution from refinancing would not be taxable.&lt;p&gt;This is why you typically want your real estate to be a separate entity collecting rent from the entity operating the business.</text></comment>
<story><title>Santa Barbara&apos;s collective memory, sold for kindling</title><url>https://www.independent.com/2024/03/29/santa-barbaras-collective-memory-sold-for-kindling/</url></story><parent_chain><item><author>KennyBlanken</author><text>&amp;gt; The paper declared bankruptcy on July 21, 2023. In a fitting final insult, the court filing listed more than $116,000 in company assets — an implausibly low valuation — as it was revealed McCaw had previously shifted the real estate property of the newspaper’s historic De la Guerra Plaza headquarters and Goleta printing plant into private LLCs under her control&lt;p&gt;This is also a very standard play in the private equity field. The property (which is usually what they really wanted) is forked off to a different entity, and then that entity charges rent back to the original corp.&lt;p&gt;This is how they kill off assisted living homes. They don&amp;#x27;t bother with cost-cutting; they just keep jacking the &amp;quot;rent&amp;quot; the property-owning corp charges the assisted living facility entity. In desperation to keep the home for residents, the staff cut every cost they can. Cracks in care quickly appear, everyone who can leave does which means lots of lost cash flow and expenses split among fewer residents...at some point there&amp;#x27;s just no more squeezing possible, the corp misses a rent payment...and that&amp;#x27;s that.&lt;p&gt;It&amp;#x27;s also the classic plot for many stories; gang&amp;#x2F;army strong-arms a village and keeps asking for larger and larger takes of the village&amp;#x27;s crops, eventually leading to the villagers starving, etc.</text></item></parent_chain><comment><author>moomoo11</author><text>Yikes man do MBA types and PE just wake up and think of evil fucked up ways to make money?&lt;p&gt;My dad works at a company run by PE monkeys who are some of the most evil mfs. My dad is a smart guy but he’s an immigrant and he says he can think but he can’t talk. It’s unfortunate but it pisses me off how badly they treat him and others.</text></comment>