Cumberland Worldwide Corp. (A) Case Study Help
While deciding the feasible decision for the company; consideration must be given to the cost of both the alternatives. Costs depend on the factors that must be changed while restructuring, such as: legal fees, negotiations with creditors and borrowers and other administrative expenses. The cost of bankruptcy depends on the legal fee that ranges from $500 to$3,500. However these costs vary from country to country, and they also depend on the economic conditions, such as: inflation.
Conclusion
The company was incurring losses, but it still had a competitive advantage in the market.The company still owned the largest share in the market and the customers still remembered the company as a quality provider. The company’s turnover rate had increased as due to some internal issues; the senior managers were fired. Many employees left the company by quitting their jobs due to that, and there were numerous vacancies to fill. The company was facing management problems and its operations had started to plummet, and the investment in product development got delayed due to losses which the company had incurred.
The company’s management is new and we can’t say how skillful they are. They can make the either companysuccessful orits shares might lose their current liquidity value. Additionally, the company needs the shareholders and security holders to help in restructuring. The company should be liquidated instead of waiting for the market value to decrease even more and the share price to lose its value completely. The company has faced intensive losses, now it needs to revive. For the purpose of getting revived; the company isrequesting the shareholders and security holders to help in bearing the losses and to make investments in order to stabilize the company.
Besides that, after restructuring the company; fresh start should be adopted by the management so that the company gets in a position of starting over, with a clean financial performance that could attract the stakeholders, such as: shareholders, suppliers and etc. The other benefit is that company’s fixed assets would be valued on fair market value. A fresh start is necessary for the company, as its long-term liabilities are higher, which will enable the company to see the big picture and avail the opportunities in the market and make strategies to deal with threats. A key catalyst is to avoid the cost of bankruptcy for both the borrower as well as the creditors.....................
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