When a company can no longer make payment on its debt, it is ____ 1 in debt restructuring, 2 in debt default 3 has debt burden, 4 in debt crisis
Question
When a company can no longer make payment on its debt, it is ____
- in debt restructuring
- in debt default
- has debt burden
- in debt crisis
Solution
When a company can no longer make payment on its debt, it is 2 in debt default.
Debt default occurs when an individual or company is unable to pay back a loan or meet contractual obligations. This situation can trigger a series of legal and economic consequences, including potential bankruptcy or restructuring options. The other options presented, while related to financial distress, do not specifically refer to the inability to meet debt payments. For example, "debt restructuring" involves renegotiating the terms of existing debts, "debt burden" refers to the load of debt an entity carries, while "debt crisis" is typically a broader economic issue affecting multiple entities or sectors.
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