Bankruptcy or the merger?
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When a company sells bonds to raise capital, they make monthly payments but a large lump some will come due at some point. If a company doesn’t have the cash to pay it off, they can issue new bonds to pay it off which kicks out the due date. However, if a company’s bonds are in junk territory, meaning that their credit rating is low (which I imagine Cengage’s is) the interest rates can make this impossible. This situation was the final nail that put Cengage in bankruptcy the first time.
What's this balloon payment people are referring to?
MH told me to be my own CEO....so I fired half the company and looted the cash reserves to give myself a 7 figure bonus
Being a CEO is a big club, and guess what... You're not in it.
A looming balloon payment and abandoned merger with McGraw was what led to the last bankruptcy. How does MH keep his job?
It is one or the other.
If the merge goes through, bankruptcy will be delayed and Hanson will have a good many years to dismantle McGraw just as he has Cengage.
If the merge is blocked, Cengage has some problems. Namely, an enormous "balloon" debt repayment that is coming due in a year or two. That one repayment would destroy the company, it is several times the size of their revenue and cash-on-hand. Hanson will have bailed before then, of course.
If it comes, the next bankruptcy will be a dismantling - selling off the concern in pieces and parts.
The chicken