Define the following terms: (2) extension

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Define the following terms: (2) extension

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Define the following terms:
(2) extension

Explanation & AnswerSolution by a verified expert

Explanation

In an extension procedure, the company asks its creditors to postpone their payment dates during financial distress. By postponing the dates of repayment, the company gets time to make its financials sound so that it can pay the debt payments. It is preferable by creditors as it promises full payment eventually.

Verified Answer

Extension is a type of informal restructuring where the company in financial distress asks creditors to postpone their dates of repayment.

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