Actually, what this law does is make the companies unsalable. If they were making money, most likely, they wouldn’t be up for sale. Somebody who buys them typically makes a pitch to their creditors about how they can repay the creditor’s investment. This law limits what the new buyer can do and forces the new buyer to continue operating a business that he most likely bought for other reasons; developing the land, for example.
This means that the companies for sale will still go out of business, but the company owners can’t salvage anything from the loss.
This won't kill every deal, but it will make a bunch more difficult. Just a little more sand in the gears of commerce.
Simplistically, this means the bid for any Kali business will be reduced by the value of the unwanted labor expense.
It also makes the state hostile to new investment. And by raising property taxes, imprisoning property owners who are upside down on house values. They are making it to where you can't leave. It reminds one of the song "Hotel California". You can check out (die) but you can never leave.
Another bleeding heart policy that will likely hurt those it is designed to help. A company might be losing money for many reasons, e. g. fuel costs, California taxes and regulations, unions. If a new company had the wherewithal to rescue such a company, but can't because of Big Gov., the original company may go bankrupt, leaving all the workers unemployed for a long time.
Hey, but Cal. has generous government programs for those poor workers, right?
There are plenty of ways to buy just the assets, but why does a businessman want assets he cannot use to make a profit?
Our family owned business just went through something a bit similar here in Illinois. Our employees opted to go union, and during the voting process, we were prohibited from selling or closing our business. Once the vote was ratified, the chances of us selling it were slim to none (this happened very fast, it took only a couple of months for the unions to muscle in).
As soon as it was ratified by the NLRB we began the process of closing the doors. We attempted to do it in a fair method, that would allow our creditors and us, time to liquidate assets and pay what we owed, by attempting to sell some of our assets to our other LLC’s and other contractors in the area. We were served an injunction to cease that activity, and were told that we had to keep our employees on the payroll as long as we were doing business (which we weren’t, we just hadn’t closed the books on the first company), so we had to have our attorneys shop a judge to certify our company was closed ASAP, and not “Doing Business As” one of our LLC’s.
A total pain in the ass, and the state and the unions continued to make it worse even after the fact, more of a punishment to us than anything else.