What is meant by "rescue financing"?

"Rescue financing" refers specifically to the capital that is provided to stabilize a distressed company, typically during a financial crisis or when the company is facing severe operational challenges. This type of financing is crucial as it helps to ensure that the company can continue its operations, pay its creditors, and potentially navigate through its difficulties to reach a more stable state. The focus of rescue financing is on immediate support to address liquidity issues, sustain operations, and ultimately restore the company’s financial health, which is pivotal in situations where a company is on the brink of insolvency.

Other options, such as funds for marketing and expansion efforts, investment in new product development, or funding for executive compensation packages, are not aligned with the purpose of rescue financing. Such initiatives typically focus on growth and advancement rather than addressing urgent financial distress situations, thus lacking the immediate necessity and urgency of rescue financing.