Page 233 - Microsoft Word - 00 P1 IW Prelims.docx

Corporate failure and reconstruction

A reconstruction will only be successful if it manages to balance the
different objectives (risk and potential return) of both shareholders
(ordinary and preference), and creditors / lenders.

If the proposed reconstruction is not attractive to the creditors /
lenders, they have the right to apply to the courts to wind up the
company, so it is particularly important in an exam question to
consider the creditors’ / lenders’ perspective.

Illustrations and further practice

Now try TYU 7 in Chapter 14

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