Chapter 17

Alternative Exit and Restructuring Strategies: Bankruptcy, Reorganization, and Liquidation


The focus of this chapter is on bankruptcy and liquidation as alternative restructuring or exit strategies for failing firms, on the characteristics of such firms, and the bankruptcy process. This chapter discusses in detail the major motivations for bankruptcy and the conditions under which a firm is considered to be bankrupt. Bankruptcy enables a failing firm to reorganize, while protected from its creditors, or to cease operation by selling its assets to satisfy all or a portion of the firm’s outstanding debt. How reorganization and liquidation take place both inside and outside the protection of the bankruptcy court are examined ...

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