NEWSWIRE - October 15, 2001
Topic: Bank Loans and Financial Distress
Source: "Waiving or Drowning: Banks Face Loan Bind," by Mitchell Pacelle, The Wall Street Journal, October 15, 2001, page C1.
Synopsis: Travel related businesses have seen a severe decline in revenues since the September 11 attacks. This article discusses the impact of this decline on the timely repayment of bank loans. It also describes the negotiations that take place between borrowers and lenders when a scheduled payment is unlikely to be made in a timely manner.
Discussion Questions:
- What role do bank loans play in the financing of corporate assets?
- If a firm can't meet its bank loan payments as legally
obliged, what is likely to happen?
- What if the firm continues to miss scheduled payments?
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