Tag Archive for: OTP

Would you fail a liquidity test too?

The inspiration for this article comes from two sources. One the article about BCE takeover falling apart and the other today being Black Friday in the US. At first glance you may have a hard time figuring out how these two events are connected, however upon closer inspection they are essentially about the same thing.

The Ontario Teachers Pension Plan take over of BCE (Bell Canada Enterprise) quickly evaporated this week thanks to a 5 line clause in their agreement. The basis of that clause was a solvency test which they failed, in layman’s terms, their debts outweighed their assets. Black Friday, the day where retailers hope to finely get into the black (profitability).

Take a look at your own life, if you were faced with a life emergency and were forced to liquidate everything, would your debts outweigh your … Read more