> The usual way for VC backed companies to fail is they either get sold for pennies on the dollar to PE or a competitor, or they wind down, fire their employees, shut down their cloud instances and either become little restaurants on the web, zombies or simply cease to be.
So if you get a loan and fail, and the business isn't worth taking over by the creditors to operate or sell, you wind down, fire employees, shut down the cloud instances, sell off the furniture. If The VC's investment terms allow for a clawback of capital, the exact same thing happens but we don't call it a bankruptcy, they just don't lose their full investment and the bankruptcy stats look great.
So if you get a loan and fail, and the business isn't worth taking over by the creditors to operate or sell, you wind down, fire employees, shut down the cloud instances, sell off the furniture. If The VC's investment terms allow for a clawback of capital, the exact same thing happens but we don't call it a bankruptcy, they just don't lose their full investment and the bankruptcy stats look great.