Quote:
Originally Posted by KRatcliff
I know you are not suggesting that they are filing bankruptcy or even considering it, but I have a general question for you in this regards. You have researched that they have no long term debt, mortgages, etc. My question is why would bankruptcy even be on the table at all?
Unless somehow a company, individual, or organization would have liabilities or obligations exceeding assets or capital to cover then nothing should force (no pun intended) them to choose bankruptcy as an option.
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Kyle, you could have assets that are worth more than your liabilities but still can file bankruptcy, especially if the assets are hard to sell, would take a lot of time, etc. For example, you could have a building but little cash to operate with, have creditors and employees breathing down your back. In conditions like we are experiencing now, cash is necessary to get businesses through this pandemic downturn and closures. Bankruptcy basically provides debtors with significant power to rearrange their business affairs while giving creditors a clear plan as to how they will get paid. If there are lawsuit issues oftentimes the defendant will file bankruptcy, get that debt in the entire scheme of the finances.