Greece, Alabama and the Will to Pay
When a lender loans money to a company, the analysis focuses entirely on whether the company will be able to repay the debt. This may involve analyzing whether the company has enough cash flow, how much it will need to spend on capital expenditures in order to continue operations and what assets the company might be able to liquidate if it all goes wrong.
Whether the company has the willingness to pay isn't a consideration, as the borrower has little choice in the matter. The lender can try to declare bankruptcy, but if the court believes the ability to pay is there, the court will likely enforce the terms of the loan. Perhaps more important, the borrower knows that if the terms of the loan are breeched, the lenders will take ownership of the company. Quite literally, the corporation will either honor the debt or die trying....1222 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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