Defining Corporate Failure: Addressing the ‘Financial Distress’ Concept: Part 1

Abstract

The term “financial distress” has, like no other within the realms of corporate failure, caused such problems when being applied in practice. Questions surrounding how the concept should be applied has led to some disparity when applied to circumstances, which have been similar in nature. The different outcomes have inevitably left the law requiring some clarification. This paper intends to highlight the historical approach to assessing financial distress and review the current developments in the law.