Hedge funds and billionaires at the helm of failing companies deserve to have their wealth wiped out by the coronavirus crisis, a top investor has claimed.

Chamath Palihapitiya, who was a senior Facebook executive in its early days and is thought to be worth more than $1 billion, called for Donald Trump’s government not to bail out companies facing collapse.

Speaking on CNBC on Thursday, he claimed rescue packages are not needed to protect workers and ‘disproportionately’ prop up poor-performing CEOs.

His comments come as the White House irons out a deal to save struggling airlines, which are asking for a sum of $50 billion to protect 750,000 jobs across the industry.

The money would be drawn from a $2 trillion package announced in March to bolster hard-hit industries as well as hospitals, unemployment insurance schemes and the pockets of ordinary Americans.

Asked whether airlines should be allowed to fail, Mr Palihapitiya said: ‘Yes. When a company fails it does not fire their employees. It goes through a package bankruptcy.’

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The only people to be ‘wiped out’ are ‘speculators’ and people who have shares in a business or own it outright, he argued.

‘They deserve to get wiped out. But the employees don’t get wiped out. The pensions don’t typically get wiped out.’

‘We’re talking about a hedge fund that serves a bunch of billionaire family offices. Who cares? Let them get wiped out.’

Mr Palihapitiya is the CEO of Social Capital, a venture capital firm with around $1.2 billion in assets.

Venture capitalists stand to make large gains from the collapse of big established corporations as they invest in start-ups and emerging companies.

Asked whether ordinary workers who own shares in their company deserve the same fate, he said most companies are overwhelmingly owned by investment funds and employees have ‘a few thousand dollars of shares’ at most.

While bankruptcy does not force a company to lay off its staff, their jobs can disappear soon after if the prospects of a recovery are slim.

It is common for struggling firms to draw up a plan to restructure their business under new ownership in anticipation of going bankrupt, which can involve lay-offs if bosses deem it necessary.

The coronavirus crisis threatens months of disruption which could make such plans drastically less appealing to new investors who would have little use for their assets.

Travel restrictions are widely seen as a far bigger current threat to the airline industry than structural problems of the kind which toppled Thomas Cook.

The collapsed British airline battled for months to restructure itself and nearly agreed a takeover with a Chinese investment firm before turning to the government for a bailout.

A smaller German airline owned by the firm was rescued by the German government while Thomas Cook workers eventually lost all their jobs.

It later emerged Boris Johnson’s office was presented with a plan that could have saved Thomas Cook but rejected it to avoid ‘setting a precedent’ for other companies.

Some economists argued the plan would have cost hundreds of millions of pounds more than the airline’s bosses promised.

In the UK, pensions are protected from company collapses by the government-backed Pension Protection Fund (PPF).

Thomas Cook’s pensions plan has survived the collapse, but bosses expect it may not have enough to pay members its full benefits and may need to draw on PPF funds.

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