Devashish Sharma, OP Jindal Global University
“Insolvency can also be termed as the procedure of financial death and rebirth” (Pahwa, 2018)
This paper examines the current Insolvency Regime of the country and is based upon the pitfalls and inadequacy of insolvency legislations hegemonizing corporate sector in India.
Debt Financing: A fundamental activity by Corporate Persons
“The Pecking Order theory says that the firm will borrow, rather than issuing equity, when internal cash flow is not sufficient to fund capital expenditure” (Myers, 2001)1. In the process of financing a new venture the directors of a corporate firm estimate two major outcomes- whether the venture will maximize profit, or it will increase overall valuation of the firm. While the former outcome is limited to increase in wealth of shareholders, later increases market share, market value and overall income power of the corporation. Debt financing is a process which undertakes less cost of raising capital compared with equity issue, but it undermines the objective of profit because interest on liability is an expense, however, the corporation benefits in long run. Issuing equity to dilute current share of stakeholders is an indication to overvalued stock and on the other hand utilizing debt to fund a project is a sign of capability.
