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Ans: Corporate insolvency law regulations and policies play a significant role in society and in the economy. They provide honest but unfortunate debtors with a chance to a fresh start by relieving them from their debt.
Insolvency law policies also let resources to be quickly returned to the financially unstable companies. This way, these organizations can use the resources to restructure rather than filing for bankruptcy.
Ans: If an organization is insolvent, or has been under intense pressure from the creditor, they can consider insolvency. The first thing to understand is that insolvency is ultimately a legal procedure aimed at helping companies with debt, and increasing the returns for creditors.
Having said that, it’s also a way for owners of struggling businesses to look for respite from immense stressful situations, and shut down companies that are barely functional.
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