Bringing Finance to Your Fingertips 

In modern economic policy debates, the fate of loss‐making companies is a topic that has garnered considerable attention. While conventional wisdom may suggest that failing firms should be liquidated to free up resources for more productive uses, a closer examination of both theory and empirical evidence reveals that preserving these companies may often be the superior option. This article investigates the benefits of allowing loss‐making companies to continue operating rather than being wound up by government intervention. We argue that, under certain conditions, continuing operations—despite incurring short‐term losses—can preserve intangible assets, maintain employment, and provide the groundwork for eventual recovery and sustainable growth.

This article is structured in multiple parts. In Part 1, we introduce the theoretical underpinnings that support the continued operation of loss‐making companies. In subsequent parts, we will explore empirical evidence from past crises, analyze case studies ranging from the 2008 financial crisis to contemporary examples in different sectors, and discuss policy frameworks that facilitate a turnaround strategy for firms that may be strategically important but currently unprofitable.

Read Part 1