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    STUDIA NEGOTIA - Issue no. 2 / 2004  
         
  Article:   COMPANIES IN USA FACING BANKRUPTCY. WAYS OF SOLVING IT: REORGANIZATION OR LIQUIDATION.

Authors:  PACURAR DANIELA CRISTINA.
 
       
         
  Abstract:  The article talks about the main issues involved in bankruptcy and financial distress in general. The fundamental issue that must be addressed when a company encounters financial distress is whether it is “worth more dead than alive”; this means if the business would be more valuable if it continued in operation or if it were liquidated and sold off in pieces. When the company’s financial difficulties appear to be temporary, creditors work directly with the company for restructuring the firm’s debts, either in an extension, postponing the date of required payment, or in a composition, where creditors voluntarily reduce their claims on the debtor. When it is obvious that a firm is worth more dead than alive, some informal procedures can be used to liquidate the firm. One of these is the assignment, which usually yields creditors a larger amount than they would receive in formal bankruptcy liquidation. It is very important for a manager to know all the issues involved in bankruptcy because facing a situation like this, the decisions that he is taking along with the creditors’ and stakeholders’ decisions, before and during bankruptcy proceedings, will determine the final results of the company.  
         
     
         
         
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