Generally, when will a firm be forced to bankruptcy, or reorganization? can you give me a real world example?

Answer 1

Common reasons that a company is forced into bankruptcy include 1) the inability to pay debts (usually after the company's creditors have already renegotiated the debt more than once), and 2) enormous legal liabilities (actual or contingent).

Examples of companies in 1) include Enron and many others.

There are times that companies may choose to go into Chapter 11 before they are forced to, in order to allow themselves time to get the business back on track. United is one of those.

Examples of companies in 2) include for example the asbestos companies, implant makers, etc. I haven't really paid attention to whether tobacco companies have done the same

Answer 2

Speaking of your average company-generally, a decision to initiate a going concern evaluation by creditors (other than due to defaults) will result from suppliers and even customers checking your financial status with the creditors in a manner not customary for the business type, or not customary for the business. VERY common.