Why cheapest debt should go to firms that have higher chances of success

There should be estimates for the resolvability of companies. Cheapest debt financing should go to firms that have higher chances of success

Credit risk analysis in India in the past has focused on the question: Will this company be able to pay its dues? Now we need to additionally think about the loss experienced by lenders after default. What will happen if the company gets into trouble? What recovery rates will be obtained through the Insolvency and Bankruptcy Code (IBC)? This takes us to the question of resolvability. High resolvability requires a comprehensible and transparent business, where control can be transferred easily. Such businesses will elicit buoyant bids in the IBC process, and the loss, given that there is a default, will