They are confident that the organization can overcome any adverse situation. And they usually have a general understanding of their profitability. Unfortunately, however, they are often unable to pinpoint which aspects of the business are making or losing money on an ongoing basis. That's where real trouble can start. In the many years we have worked with troubled companies, the common denominator in virtually any business that ends up in Chapter 11 is management that did not have an accurate handle on its true financial condition.
Management typically underestimates the severity of the situation, until it's too late.
Recognize the warning signs. Get a good watchdog. Recognize the warning signs. Your lender is requiring an independent evaluation of the company's viability before continuing support or advancing additional credit. Your CPA should be one of your first lines of defense.