Firms that are in financial distress can use prepack arrangements, where the financially distressed firm sells its
Question:
Firms that are in financial distress can use ‘prepack’ arrangements, where the financially distressed firm sells its assets and then immediately declares that it wishes to stop trading. This action transfers the assets to a completely new firm but without the debts of the old firm. Is this an ethical tactic?
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The use of prepack arrangements by financially distressed firms is a controversial issue that raises questions about ethics and fairness While it is understandable that companies may want to explore o...View the full answer
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Related Book For 
Corporate Finance
ISBN: 9780077173630
3rd Edition
Authors: David Hillier, Stephen A. Ross, Randolph W. Westerfield, Bradford D. Jordan, Jeffrey F. Jaffe
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