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Introduction

In: Insolvency Timing and Managerial Decision-Making

Author

Listed:
  • Frederik Drescher

    (TU München)

Abstract

A predominant interest of a company's shareholders is maximizing the value of their shares. This interest is at risk in financial distress, a situation in which the financial conditions of a company have deteriorated to a degree where it is unlikely to remain in business without adequate restructuring measures. Free (out-of- court) restructuring is subject to time limits as imposed by the German Insolvency Code. It postulates that at a certain point in time—marked by the triggers of either illiquidity or over-indebtedness—mandatory insolvency proceedings must be initiated in order to prevent further deterioration of company value and thereby protect creditors' claims. Optionally, the company can choose to file for insolvency earlier in case of threatening illiquidity.

Suggested Citation

  • Frederik Drescher, 2014. "Introduction," Springer Books, in: Insolvency Timing and Managerial Decision-Making, edition 127, chapter 1, pages 1-7, Springer.
    • Handle: RePEc:spr:sprchp:978-3-658-02819-0_1
    DOI: 10.1007/978-3-658-02819-0_1
    as

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