The benefits of asset stripping generally go to the corporate raiders, who can slash the debts they may have whilst improving their net worth.
[2] However, since asset stripping often results in thousands of employees losing their jobs without much consideration of the consequences to the affected community, the concept can be unpopular in the public sphere.
One particular example of where asset stripping cost a significant number of workers their jobs was in the Fontainebleau Las Vegas LLC case.
This particular corporate raid formed the idea of selling a company's assets in order to repay debt, and eventually increase the raider's net worth.
If a corporate raider sells the target company's assets individually and pays off its debts the financial regulators have no room for investigation.
[9] Asset stripping by private equity firms in Europe is now regulated pursuant to the Alternative Investment Fund Managers Directive.
This method acts on completely fraudulent terms, and results in a higher punishment from the Financial Conduct Authority (FCA).
Here, corporate raiders take ownership of a company on hostile terms, transfer the assets to their name, and then put the dilapidated firm into liquidation.