What informal remedies are available to firms
in financial distress? In answering this question,
define the following terms:
(1) Workout
An informal restructuring is typically the "lowest drastic" option for a financially troubled organization. They are very versatile and can be done behind the curtains. It can be completed in a small amount of time or it can take years.
Without the use of formal safeguards within insolvency law, many restructuring practices can be dealt with by an organization and its consultants. Often, external factors such as bankers of the company or business creditors do not even need to be involved. However, a business usually would have to approach its main creditors when resolving its issues, agreeing with some degree of hesitation on the part of those creditors.
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