Although Most Companies That File for Bankruptcy Do So Because

question 59

Essay

Although most companies that file for bankruptcy do so because of their deteriorating financial position, companies increasingly are seeking bankruptcy protection to avoid litigation and hostile takeovers. Give examples of how bankruptcy can be used to avoid litigation.

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Definitions:

Hostile Takeover

The acquisition of a company against the wishes of its management and board of directors by another company or investor.

Supreme Court Of Delaware

The highest court in the U.S. state of Delaware, primarily dealing with appeals on the interpretation of state law.

Corporate Policy

A set of formal guidelines and rules established by a company's management to guide operations and decisions.

Standard Of Conduct

The expected levels of behavior or ethical practices required of a person or organization, particularly in a professional context.