Financial Management Discussion Week 10 Essay Example | Topics and Well Written Essays - 250 words

Financial Management Discussion Week 10 - Essay Example Financial reorganization can help to manage the business assets more effectively and create scopes for the company to make profits through a going concern approach (Feeney, 2010). It facilitates the protection of major business activities and the management of various units of the business. A formal reorganization can help to make the business more efficiently managed and thus, there may be chances of the company being able to pay off the debts. A financial rehabilitation plan is an agreement between the debtor and the creditor. This process does not incur any costs. Also, in this plan, the company that owes the money continues functioning which makes it possible for the business to pay back the debts over a period of time. This ensures that the creditors will get back their money. This is not possible in case of demand liquidation. Liquidation is preferred over financial reorganization when the expenses of liquidity are low and does not consume more assets, the creditors prefer liquidation and when the liquidating value of the company is more that the going concern value for the same (Newton,