Question

In December 2008, Hawaiian Telecom took action to strengthen its balance sheet by reducing debt. Although the company continued to operate, its creditors could not collect their debts or loan payments that were due prior to the legal action that the company took. However, on November 30, 2009, the company had $75 million in cash on hand.
This is an example of:
1. Reorganization
2. Liquidation

Answer 1

Answer:

1. Reorganization

Explanation:

The reorganization is the position where the firm wants to restructure its business so that the company could able to improve its profitability by making good decisions, proper working in the organization, resource utilization, etc

While at the same time the liquidation is the winding up of the company or shut down of the company due to high losses suffered in the business

Therefore in the given case, since the Hawaiian telecom took an action  for better off the balancing sheet by decreasing debt that represents the reorganization example