If a Company Is in Financial Distress,the Existence of Debentures

question 9

Multiple Choice

If a company is in financial distress,the existence of debentures and the associated trust deed can compound difficulties.Which of the following statements is unlikely to be a difficulty for a company in financial distress?

• A)Publicity resulting from any actions taken by the trustee.
• B)Borrowing restrictions.
• C)Interest payments on the debentures.
• D)None of the given options.

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Definitions:

Disinterested Directors

Board members who do not have a personal or financial interest in a corporate decision, ensuring unbiased governance.

Conflict of Interest

A situation where a person's private interests might influence or appear to influence their professional judgment or actions, potentially leading to ethical issues.

MBCA

Stands for the Model Business Corporation Act, a template for state statute that provides a standard for corporate law.

Closely Held Corporations

Corporations that have a small number of shareholders and whose shares are not publicly traded.