Here's the simple way to think about it: It's like being a homeowner and then your LENDER takes out a 2nd mortgage on your house only to pocket the money while leaving you paying the interest on the money borrowed. You don't see any benefit but have to deal with the debt service. In addition, should you go bankrupt, the LENDER keeps that money they borrowed out while letting you foreclose on your house and absorb the debt into your bankruptcy. They walk away with the money and let you take the fall. Now imagine if multiple LENDERS do the same thing to the same company...and load it with debt while hoarding the cash and placing it into their "untouchable" bank accounts. That, in a nutshell, is how private equity can load a company up with debt and then let it take the fall. The company and it's employees and stakeholders loses, but private equity will win.