Preserving Capital through Bankruptcy
The New York Times recently published a piece entitled “When Kmart Moved Out, Churches and Flea Markets Moved In.” The article, penned by Kevin Williams, provides an instructive subtitle: “The retailer’s former stores are being used by tenants that might not typically get a crack at such a large haul of commercial space at an affordable price.”
“When it merged with Sears in 2005, Kmart had 2,085 locations. With the abrupt closing of the Astor Place Kmart in Manhattan last month, the number of open Kmart stores is down to 17,” Williams writes.
Sears filed for bankruptcy in 2018, with the assets sold to hedge fund manager Edward Lambert’s Transformco. But while bankruptcy has a negative connotation in the business world, as Jörg Guido Hülsmann wrote in The Ethics of Money Production, “Bankruptcy fulfills the crucially important social function of preserving the available stock of capital. And it plays this role in all conceivable scenarios: when it results from fraud, when it results from insolvency, and when it results from illiquidity.”
The capital in Kmart’s case once featured blue-light specials; now people flock to some of the repurposed buildings to see the light. Fo
Article from Mises Wire