Question

Can Bankruptcy be considered as a  legitimate and ethical management vehicle to be used for the benefit of the company's stakeholders?

Answer 1

No any company want yo go into liquidation and bankruptcy but due to some financial difficulties and some other reasons they have to went into bankruptcy. At any time if company or its management find that their are not able or this company cannot be survive longer then it is always beneficial for the company as well as stakeholders to go into Bankruptcy or liquidation. because it will save those losses that will occurred in future if company will operate. If company will not go into bankruptcy then it also might be that the stakeholders will not receive the amount of share that they will receive today if company go into bankruptcy. In simple language we can say that it can save future losses and give the amount of share of today's company's worth.

Therefore Bankruptcy can be considered as a legitimate and ethical management vehicle for the benefit of company's stakeholders if the company or management find that management are not capable or company cannot perform better in future then it's better to go into bankruptcy that will save future upcoming losses due to bad management or worst performance of company.

I hope this clear your doubt.

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