Question

In: Finance

Create a scenario in which a business’s most attractive option may be to declare bankruptcy identifying...

  • Create a scenario in which a business’s most attractive option may be to declare bankruptcy identifying the benefits and consequences of the filing. Provide a rationale with your response.
  • Create a scenario in which you would sell a portion of your financially troubled credit repair business to a turnaround management company in hopes of getting the business back on track. Provide support for how this may be a desirable option.

Solutions

Expert Solution

Scenario under which the business most attractive option will be to declare bankruptcy as when the business is having a large amount of operational losses and it is also facing a lot of indirect cost related to bankruptcy then it will be directly trying to get into the insolvency process in order to eliminate all the cost and ensure the recovery of its stakeholders.

Benefits related to filing of bankruptcy will be that there will be saving of the cost and there will also be protection of the interest of the stakeholders and it will also lead to securing higher recoveries.

situation under which I will be selling the financially troubled business as when I will feel like my other businesses are hampered due to a particular segment I will be disposing it off, and I will try to infuse that money into the main business and those segments which are generating higher profits for me.

They should always be a benefit related to focusing on those activities which are generating high rate of return for the businesses and disposing of those activities which are burden to the business.


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