Quick Finance Tip – Emerging Difference From Bankruptcy And Liquidation

​There exists a difference between companies that reorganizes and emerges from bankruptcy vs a company that is liquidated. Most often, this can be attributed to the difference between operating and financial leverage. Companies with high operating leverage have less flexibility in making changes. Therefore, bankruptcy protection does little to help reduce operating costs. Contrarily, companies with high financial leverage use bankruptcy laws and protections to change their capital structure, and upon restructuring, emerge as “going concern”.