Consequences of Insolvency
The principal focus of modern insolvency legislation and business debt restructuring practices no longer rests on the liquidation and elimination of insolvent entities but on the remodeling of the financial and organizational structure of debtors experiencing financial distress so as to permit the rehabilitation and continuation of their business. This is known as Business Turnaround or Business Recovery. In some jurisdictions, it is an offence under the insolvency laws for a corporation to continue in business while insolvent. In others (like the United States with its Chapter 11 provisions), the business may continue under a declared protective arrangement while alternative options to achieve recovery are worked out. Increasingly, legislatures have favored alternatives to winding up companies for good.
It can be grounds for a civil action, or even an offence, to continue to pay some creditors in preference to other creditors once a state of insolvency is reached.
Read more about this topic: Insolvency
Famous quotes containing the words consequences of and/or consequences:
“There is not much that even the most socially responsible scientists can do as individuals, or even as a group, about the social consequences of their activities.”
—Eric J. Hobsbawm (b. 1917)
“The horror of Gandhi’s murder lies not in the political motives behind it or in its consequences for Indian policy or for the future of non-violence; the horror lies simply in the fact that any man could look into the face of this extraordinary person and deliberately pull a trigger.”
—Mary McCarthy (1912–1989)