A couple of days ago I mentioned that Travelodge seemed to typify the problems with the UK economy. I also mentioned that Travelodge was a profitable company which saw a 16% increase in profit last year.
Travelodge was bought out in a highly leveraged deal in 2006. Dubai International Capital (aptly acronymed DIC). Though DIC borrowed the money, Travelodge got saddled with the debt - if anyone can explain that to me I'd be happy to hear from you. DIC borrowed £478 million. The result is that Travelodge pays £100 million per year in interest payments.
Now we find that Travelodge has been handed over to it's creditors: Goldman Sachs and two hedge Funds. Once again we find that banks have loaned a stupid amount of money and have wrecked a perfectly good company in the process.
The creditors are writing off 40% (£235 million) of the debt. This is an important fact. As Steve Keen has said, we just have to decide how not to pay back these debts. This is what needs to happen much more broadly - debt write off, the modern debt jubilee.