1. What are the direct and indirect costs of bankruptcy? Explain each.
2. What is the difference between chapter 11 and chapter 7 bankruptcies? Please research for a company that is undergoing either process and share with the class.
3. Bankruptcy is costly because of the dislocations it creates for firms. A firm may actually have valuable assets whose operations produce an excess of revenues overs costs of production, yet the firm may go bankrupt because it has large debt payments.

The question arises, why at all use debt for financing if it can lead to bankruptcy? Why not use only equity?