Implicit Bankruptcy Costs

Implicit Bankruptcy Costs

Opportunity costs incurred prior to the bankruptcy process such as the loss of sales or financing.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Implicit Bankruptcy Costs

Costs of bankruptcy other than attorney's fees, payments to creditors, and other direct costs. Implicit bankruptcy costs include the revenue one could have made from concentrating the company's energy on sales rather than the bankruptcy, or the increased interest rates the company will have to pay on loans. Implicit bankruptcy costs are difficult to measure and are an example of opportunity cost.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved