RE:August 12Technically, nothing could theoretically happen but also everything could happen. There are some things to consider/ can be done:
- Is it secured debt vs unsecured?
- The loan provider can extend the loan
- The loan provider can go after assets used to secure (court)
- Limits future borrowing (credit rating)
or my personal favourite
- The loan issuer does nothing and keeps the arrangement in place, eating the loss until such a time they can be repaid
Not all defaults go to company breakdown/bankruptcy because it almost guarentees they will never be paid what they are owed but it highly depends on the "type" of loan and the issuer of the loan(s) and what they believe could happen