Crisis Management Flashcards
6 cards from real TMA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Crisis Management flashcards as text
What is an 'automatic stay' in Chapter 11 bankruptcy?
Answer: A court-imposed halt on most collection actions and legal proceedings against the debtor
The automatic stay is a court order that immediately halts most creditor actions against the debtor — including lawsuits, foreclosures, and collection calls — upon a Chapter 11 filing.
What is 'employee retention' a key concern during a turnaround?
Answer: Key talent leaving can destroy the operational capability needed to execute the turnaround
Losing key employees during a crisis degrades the operational expertise and institutional knowledge the company needs to execute its turnaround, making the situation worse.
What is a 'key employee retention plan' (KERP) designed to do?
Answer: Provide financial incentives for critical employees to stay through the restructuring process
A KERP offers retention bonuses or other incentives to key employees to prevent them from leaving during the uncertainty of a restructuring, preserving operational capacity.
What is a 'bridge loan' in the context of corporate distress?
Answer: Short-term emergency financing to keep a company operational while a longer-term solution is arranged
A bridge loan provides immediate liquidity to a distressed company to cover near-term cash needs while a more comprehensive financing or restructuring solution is being arranged.
Why is speed critical in a turnaround engagement?
Answer: Every day of distress consumes cash, erodes stakeholder confidence, and narrows the range of viable options
In a distressed situation, delay is catastrophic — cash burns down, creditors lose patience, employees leave, and customers defect, each reducing the probability of a successful turnaround.
What is 'force majeure' and how is it relevant in corporate crisis management?
Answer: A contract clause excusing performance due to extraordinary, unforeseeable events
Force majeure clauses allow parties to suspend contract obligations when extraordinary events beyond their control — pandemics, natural disasters — make performance impossible, which can be relevant during crises.
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