Answer (D) is correct . Benefits of insolvency may include restructuring of the firm’s assets and capital structure, divestiture of noncore operations, development of new strategies and new forms of organization, and relief from creditors’ actions while the firm is in a Chapter 11 reorganization. However, being forced to liquidate is the result that a firm most wants to avoid.
Answer (A) is incorrect because Focusing on core operations is a possible advantage.
Answer (B) is incorrect because Capital restructuring is a possible advantage.
Answer (C) is incorrect because Reorganization under the protection of Chapter 11 is a possible advantage.
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