The titles of several famous Raymond Chandler novels are euphemisms for death. At the top of the list, there's The Long Goodbye and The Big Sleep. (Poodle Springs less so, but who really knows?)
The Big Bath kind of falls into that category.
Think of the guy in The Godfather II, who, after seeing his brother in the audience of a Congressional hearing and having a seemingly anodyne conversation about the Roman Empire, decided to slit his wrists in the bath (it makes sense in the context of the movie). That's a Raymond Chandler-style Big Bath.
Now imagine the guy in The Godfather II is a company. That company is having a bad year. Rather than do everything they can to bolster the terrible results, management instead turns into the skid. They take write downs. They accelerate losses. They do everything they can to make the current period look as bad as possible.
This has two effects. If they pick the right moves, they can clear the decks and move more profitably into the future. But secondly, even if this doesn't entirely work, at least future results will look stronger compared to the "big bath" they took already.
So, unlike the Godfather guy, the plan is to get up and start walking around again. But at the time, it feels about the same.
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Finance: What is Bankruptcy?260 Views
Finance a la' Shmoop what is bankruptcy well in the old days
this was bankruptcy you'd go to prison if you couldn't pay your bills and [People in prison for bankruptcy]
unfortunately there weren't and still aren't a lot of legal high wage earning
opportunities in prison working your way out of debt on the chain gang wasn't [Prisoners working outside]
really a thing back then so instead the burden would be on your family to pay
back the loan you'd promised to pay back and didn't ugly situation it paved the [Officer knocking on a prisoners family member to pay their debts]
way for some well today bankruptcy has a range of flavors that it comes in but
basically it exists as a legal vehicle to avoid the aforementioned situation a [Bankruptcy van driving]
bankrupt person and/or corporation stands in front of a judge they turn
their pockets inside out with a sad face and the judge then decide who will be [Person opens their pockets inside out in front of a judge]
paid when and how much well how does she decide the order for who gets paid back
when? well, it usually prioritizes employees and vendors owed a paycheck
above banks who have made a loan and under that umbrella all different types
of loans have different priorities if the bankrupt individual owns a home it's [bankrupt individual in his home on the toilet reading a newspaper]
usually sold out from under him and anything left after paying off the
mortgage is used to pay others even if you do survive a bankruptcy your credit
is pretty much ruined who's going to want to loan you money once you've
proven that you're not good with being loaned money yeah if you've defaulted in [a really low credit score chart for a bankrupt individual]
the past on promises to pay people back why wouldn't you do the same thing again
well remember that twenty dollars you loaned your buddy Eric that he never [Person loaning 20 dollars to friend Eric
paid back well how eager are you going to be to hook him up with another twenty
especially since you'd only be feeding his betting on frog fighting habit yeah [Eric betting money on frog fighting]
not so much so long Eric you'll get the help you need!
Up Next
What is a going concern rule, and does it have to do with the bathroom? No? Okay...no harm in checking.