Final answer:
A firm in reorganization may issue new securities, continue operations, and must get approval from creditors. It does not necessarily have to liquidate assets and cease business.
Step-by-step explanation:
When a firm is undergoing a reorganization, certain aspects define this process. The correct statements about a firm that is taking advantage of a reorganization are:
- It is allowed to issue new securities.
- The firm continues to operate.
- The business must have its reorganization approved by its creditors.
A firm that is reorganizing does not need to liquidate its assets and end its operations, so that option doesn't apply.
Reorganization is a financial restructuring technique that allows firms facing difficulties to rearrange their affairs. The goal is to continue the business's operations and to try to return to profitability while adjusting its debt obligations. Often, this is accomplished through issuing new securities, which may be approved by the firm's creditors as part of the reorganization plan. It's important to note that this process is aimed at helping the firm recover rather than shutting down its operations.