POINTS TO REMEMBER
  1. What are the different types of corporate financial distress?
    • Economic failure
    • Financial failure on account of illiquidity
    • Financial failure on account of insolvency
  2. How do you anticipate financial distress?
    • Weak financial ratios
    • Weak management incentives
    • Weak strategic factors
  3. What are the determinants of the mode of handling failure?
    • Nature of failure
    • Extent of failure
    • Choice of different parties related to the firm
  4. What are the modes of handling failure?
    • Contingency planning
    • Voluntary settlements - Extension, Composition and Voluntary liquidation
    • Re-organisation of capital
    • Liquidation by court

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