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Article: Status quo at the abyss?(CRISIS MANAGEMENT)
- Article from:
- Directors & Boards
- Article date:
- June 22, 2006
- Author:
CopyrightCOPYRIGHT 2006 Directors and Boards. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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Faced with some combination of impending liquidity and capital-structure crises, companies and their boards of directors may consider multiple options. One option is to maintain the status quo and do nothing.
This is roughly analogous to the physician's credo of "first, do no harm." In effect, this strategy plays for time (liquidity permitting), in the hope that market forces or operational initiatives can adequately address the capital structure challenges that have arisen because of the mismatch between leverage and operational performance.
In this scenario, the company will monitor the situation, perhaps trying to improve liquidity internally but ...