If Twitter Inc. files for bankruptcy, Elon Musk would be the biggest loser, according to a WSJ Pro Bankruptcy commentary. Mr. Musk told Twitter employees in an all-hands staff meeting Thursday that he wasn’t sure how much financial runway the social-media company still has and that “bankruptcy isn’t out of the question.” Mr. Musk can be flamboyant at times, but let’s take his words seriously for a moment. In case of a Twitter bankruptcy, Mr. Musk — who took over Twitter for $44 billion just two weeks ago and put in $27 billion of his own money — most likely would have his investment wiped out, as equityholders are the last to be paid when a company restructures. Those that joined him and took equity stakes, like Sequoia Capital, Binance and the Qatar Investment Authority, would face a similar outcome. But Mr. Musk is by far the biggest investor. Banks, including Morgan Stanley and Bank of America Corp., that together put up $13 billion of their own money for debt in Twitter, could also see losses. The banks had to place the debt on their books as they couldn’t sell the bonds fast enough to a wider group of investors. They, however, have some safety nets. Roughly $10 billion of the $13 billion in debt is backed by specific assets, ensuring that they would be paid back, even if not in full.
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