Inside debt is
A)debt incurred by the firm's insiders
B)the amount of money raised by the firm's insiders
C)a contract giving the creditor access to the firm's inside information
D)the amount of money owed to the firm's employees
E)a contract that empowers the creditor to seize the firm's assets in the event that the firm defaults

Question

Quizplus · Accepted Answer

Inside debt refers to a financing technique where a creditor is granted access to the firm's confidential and proprietary information. This is often done through a debt contract that includes covenants giving the creditor certain rights, such as the ability to appoint a board member or to receive early repayment in the event of a default. This type of financing is typically used by firms to secure financing from investors who have a close relationship with the company, such as senior executives, directors or large shareholders.

Inside Debt Is