Lecture_20

Lecture_20 - Lecture 20: Bankruptcy, Reorganization and...

Info iconThis preview shows pages 1–8. Sign up to view the full content.

View Full Document Right Arrow Icon
Lecture 20: Bankruptcy, Reorganization and Liquidation BD Chapter 25
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Topics Overview of bankruptcies Informal remedies Formal reorganization
Background image of page 2
Top Ten Largest Bankruptcies Since 1980
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
What are the major causes of business failure? Economic factors industry weakness poor location/product Financial factors too much debt insufficient capital Most failures occur because a number of factors combine to make the business unsustainable.
Background image of page 4
Timing and Firm Size Do business failures occur evenly over time? A large number of businesses fail each year, but the number in any one year has never been a large percentage of the total business population. The failure rate of businesses has tended to fluctuate with the state of the economy. Bankruptcy is more frequent among small firms. Large firms get more help from external sources, given their greater impact on the economy.
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Key issues managers face in financial distress Is it a temporary problem (technical insolvency) or a permanent problem caused by asset values below debt obligations? Who should bear the losses? Would the firm be more valuable if it continued to operate or if it were liquidated? Should the firm file for bankruptcy or use informal procedures? Who would control the firm during liquidation or reorganization?
Background image of page 6
Informal remedies Informal reorganization Workout: Voluntary informal reorganization plan. Restructuring:
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 8
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 06/06/2011 for the course FINA 4200 taught by Professor Wu during the Spring '08 term at UGA.

Page1 / 18

Lecture_20 - Lecture 20: Bankruptcy, Reorganization and...

This preview shows document pages 1 - 8. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online