Which of the following investors can force a firm into bankruptcy court if the firm does not pay the expected cash flow to the investor?

Question

Quizplus · Accepted Answer

Debt investors, such as bondholders or lenders, have a legal claim to the firm's assets and can force the firm into bankruptcy court if it fails to meet its debt obligations. Common and preferred equity investors, on the other hand, do not have a legal right to claim the firm's assets and are therefore not able to force the firm into bankruptcy court.

Which of the Following Investors Can Force a Firm into Bankruptcy