Question

I Like to Cook & Travel Ltd (ILTCT) was struggling financially.  Like Thomas Cook Travel Agents (who became insolvent in September 2019), ILTCT was finding it hard to compete against internet based travel companies.  Aware that there were cash flow difficulties, Jamie (a director of ILTCT) sold one of the company’s assets at a fire sale price and then spent more of the company’s remaining money launching a cook book and travel experience for vegetarians.  Jamie really believed that vegetarianism was the way of the future and that by doing this, he could improve the financial position of ILTCT.

Answer 1

when a company about to get into insolvency it can get back to normal business by using following steps

1. collect any outstanding debts from the customers to imporve the financial position

2. raise a loan using assets to pay creditors and continue the business

3. focus on most creative ides on the business

4. focus on highly profitable customers

5 reduce spending on to improve business capabilities

6. attract customers by offering good discounts

ANALYSIS

ILTCT shall not sell it assets instead it can raise a loan on it and run the business

ILTCT in this position selling the asset to improve the business capability which is not diversified can cause losses

Asset is reveune generating unit one cannot seel it in revival situation thus the decision taken by ILTCT can make the business more worse

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