The common pool problem exists because individual creditors have the incentive to foreclose on the venture even though it is worth more as a going concern.

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The common pool problem, also known as the tragedy of the commons, occurs when a resource is jointly owned or used and individuals have the incentive to consume or exploit it for their own benefit, even if it results in long-term negative consequences for everyone involved. In the case of a venture, individual creditors may have the incentive to foreclose on the venture in order to recoup their investment, even if the venture has the potential to be more profitable and beneficial to all stakeholders if it continues to operate. This creates a situation where the common pool of resources is depleted or destroyed due to the actions of individual actors.

The Common Pool Problem Exists Because Individual Creditors Have the Incentive