Page 39 - Bankruptcy and Reorganization Services

In addition to the factors discussed, specific examples of ratio analysis and other indications that indi-
vidual companies are distressed may include the following (also see the discussion under "Application
of SSVS No. 1 to Solvency Analyses" later in this practice aid):

 Excessive or growing trade debt (in relation to sales or other measures)

 Chronic shortages of working capital

 Nonpayment of payroll taxes

 A history of writing and holding batches of checks

 A history of operating losses

 Low or negative levels of equity

 Cycle of loan covenant defaults and repeated forbearance agreements

 Loss of customers and suppliers

 Excessive litigation

 Acceleration of collection efforts

 Repeated restructurings

 Liquidation of strategic assets to finance operating losses

 Inability to refinance loans, obtain credit, or raise capital through other means

 Delaying necessary capital expenditures

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