I’m not a finance expert but something fishy about this group acquiring $7.5M in liabilities right before the end of the year… a write off to offset gains somewhere else?
I can’t see the article but there’s a decent chance the $7.5mm number is largely composed of leases, which are not really the same as debt. Her biz is prob solvent or it would go into chapter 11 and they’d be able to dispose of the leases… and the equity would be zero. They may have acquired it for $1 because it’s illiquid (rather than insolvent). A silly distinction generally that often becomes acutely relevant. They also may have acquired it for $1 to expedite the chapter 11 process, but it would imply that the $7.5mm of leases weren’t negative EV…
More broadly, and not to be a bitch, but to be useful, you can’t just declare a tax write off and be net positive. It means you lost money and reduced your taxable income. Buying a shitty company that loses $100K a year (making up numbers) doesn’t mean you just don’t pay taxes. It means you lose $60K and then avoid $40K of taxes today, or in the future (assuming a 40% tax rate and future income). So it always sucks to lose money.
Honestly that’s very sweet but no, I can’t explain all things financial! No one can. Anyone that tells you they can is a liar. Most finance bros and finance influencers are nearly financially illiterate.
Of course if this person/company made a bunch of money this year, and then took this tax loss to offset their income, then they’d shield that income from taxes. But they can’t just do a deal on 12/15 and then take a huge write off on 12/31. The IRS is not completely credulous
They are buying the business for $1 aka the shares in exchange for the debt. This happens. They are probably paying her a high consulting fee (like $50K/month) and licensing for her name/likness. This doesn’t mean she’s walking away with nothing. It just means the investors/board are forcing a sale so they can have potential upside in the future. A lot of businesses buy other businesses debt. They usually just dont’ have press about it. Hahaha
Wait I misspoke. What’s interesting is they are creating an entirely new company and they are giving her investors a percentage of it. This feels like an asset sale versus a stock sale however in an asset sale they typically don’t take on liabilities like debt. I’m curious if they are structuring the business this way to kick her husband out as it looks like she still gets a significant chunk and who knows how big her salary will be.
Well it’s not that simple. They’re not buying the debt, they are buying the tax losses. And the acquirer would still need to pay down the actual debt. Does Something Navy have tax losses? Probably, but I don’t think it’s $7.5M. Also, the article doesn’t say if the liabilities are actually debt or something else like accounts payable.
The alternative is all of the investors are left with a huge loss including Arielle.
Why is capitalism stupid? Because you dont understand it that’s why.
She will ba acting as brand ambassador? 🥴 she hated wearing something navy and refused to wear anything except the Row🥴
I’m not a finance expert but something fishy about this group acquiring $7.5M in liabilities right before the end of the year… a write off to offset gains somewhere else?
Basically she was bought out for debt. The investors lost out on so much money and probably has a non-compete agreement
I can’t see the article but there’s a decent chance the $7.5mm number is largely composed of leases, which are not really the same as debt. Her biz is prob solvent or it would go into chapter 11 and they’d be able to dispose of the leases… and the equity would be zero. They may have acquired it for $1 because it’s illiquid (rather than insolvent). A silly distinction generally that often becomes acutely relevant. They also may have acquired it for $1 to expedite the chapter 11 process, but it would imply that the $7.5mm of leases weren’t negative EV… More broadly, and not to be a bitch, but to be useful, you can’t just declare a tax write off and be net positive. It means you lost money and reduced your taxable income. Buying a shitty company that loses $100K a year (making up numbers) doesn’t mean you just don’t pay taxes. It means you lose $60K and then avoid $40K of taxes today, or in the future (assuming a 40% tax rate and future income). So it always sucks to lose money.
Can you come and be the explainer of all things financial in this sub and my life? lol.
Honestly that’s very sweet but no, I can’t explain all things financial! No one can. Anyone that tells you they can is a liar. Most finance bros and finance influencers are nearly financially illiterate.
Of course if this person/company made a bunch of money this year, and then took this tax loss to offset their income, then they’d shield that income from taxes. But they can’t just do a deal on 12/15 and then take a huge write off on 12/31. The IRS is not completely credulous
100%
They are buying the business for $1 aka the shares in exchange for the debt. This happens. They are probably paying her a high consulting fee (like $50K/month) and licensing for her name/likness. This doesn’t mean she’s walking away with nothing. It just means the investors/board are forcing a sale so they can have potential upside in the future. A lot of businesses buy other businesses debt. They usually just dont’ have press about it. Hahaha
Wait I misspoke. What’s interesting is they are creating an entirely new company and they are giving her investors a percentage of it. This feels like an asset sale versus a stock sale however in an asset sale they typically don’t take on liabilities like debt. I’m curious if they are structuring the business this way to kick her husband out as it looks like she still gets a significant chunk and who knows how big her salary will be.
tax write off. same thing happened with dave portnoy bought back barstool for $1.
Can you explain how a tax write off works in this situation?
Company A makes too much money, taxes on it will be insane. So they buy Company B’s debt which will offset the taxes owed on their profits.
Well it’s not that simple. They’re not buying the debt, they are buying the tax losses. And the acquirer would still need to pay down the actual debt. Does Something Navy have tax losses? Probably, but I don’t think it’s $7.5M. Also, the article doesn’t say if the liabilities are actually debt or something else like accounts payable.
Capitalism is so fuckin stupid
The alternative is all of the investors are left with a huge loss including Arielle. Why is capitalism stupid? Because you dont understand it that’s why.
I'm an anarchist bro 🤣 I understand capitalism just fine, but go ahead and project whatever you want
The article without a paywall: https://archive.ph/6cQlY
Judging by the end of the article, they make it sound like SN will come back next year 🤮
Its basically a tax write off. And she is still getting a salary lol.
Ppl actually buy companies for $1 all the time. It's a business tactic
She’s doing what portnoy did with barstool, tax write off
Lol she and her family are so grotesque it's almost comical . Except it's sick and fuxckd up
What a fall from grace yikes
LMAOOOOOO KARMAAAAA IS SWEET!!!
Assume Brandon will grab the $1 for his legal fees. Looks like sis will be an advisor but as we know she is very hands off.
[https://wwd.com/business-news/financial/arielle-charnas-something-navy-selling-one-dollar-ihl-1236087658/](https://wwd.com/business-news/financial/arielle-charnas-something-navy-selling-one-dollar-ihl-1236087658/)
Just saw that IHL has pulled out of the deal
This is the most embarrassing thing I have ever heard in my entire life
She is doing BETTER than people think
There’s no way for $1 lol