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Managed Bankruptcy and Its Impact

By Edited Jul 21, 2016 0 0

We are well aware about the concept of bankruptcy. It is a poor financial state due to which a person or company becomes unable to repay its loan. But what does it mean by 'Managed Bankruptcy'? Actually the word 'Managed' is added to describe the condition when a huge amount is taken in the name of loan but is not given back within specified period.

World Wide Phenomenon with Huge Impact over Global Economy

It is a world wide phenomenon in which multi national companies and governments are involved therefore the spectrum of its impact is also world wide and causes serious financial crisis across the global market. Companies take huge debts from banks for investments in mega projects but because of unstable political or economical conditions of their respective countries or fluctuating financial trends in world market they become unable to carry out with their plans. In such dismal economic state they have to halt their plans for some period while banks start sending reminders about debt repayment.

Lasting Impact on Quality of Life of Common Man

Governments can also be responsible for bankruptcy by spending too much on its military budget or other ministerial expenses. As a result banks, companies and people have to pay the price in the form of high cost of living and poor employment opportunities. In such situation most of the companies follow the policy of 'downsizing' in order to cut down their overall business cost which in turn leads to low wages and contract based jobs instead of permanent and reliable employment. Such economic condition of any country adversely affects the life quality of a common man.

Dealing with Managed Bankruptcy

Federal courts can play a vital role in dealing with the problem of managed bankruptcy by announcing to take away the property of debtor in order to compensate for the amount borrowed. Managed bankruptcy can cause lots of problems for a country in terms of losing foreign billion dollars investment for huge projects. Downfall in one market can cause downfall in all markets which eventually leads to major bankruptcy where banks have no sufficient funds for being financially stable. In such situation substantial financial support is arranged for these banks by pledging money which is known as bailout plan. It's true that managed bankruptcy can give a second chance to companies but it can also be the last thing the companies might want to face.



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