Right Tight Fasteners Private Limited is a mid-sized fastener manufacturing company with a 30-year track record. Operating in a working capital-intensive and low-margin business, the company manages to safeguard its profitability by passing on cost increases resulting from steel price volatility, thanks to its irreplaceable position as a proven vendor. But the COVID-19 pandemic had drastically reduced demand, pushing the industry into turbulent times marked by declining revenues and a liquidity crunch. This situation has forced the firm’s chief executive officer and chief financial officer to consider how Right Tight Fasteners Private Limited would manage this liquidity crisis. Could the company survive without defaulting or restructuring? What rescue options were available to them?

Student Spreadsheet to accompany product W40391.

Student Spreadsheet to accompany product W40391.

Instructor Spreadsheet to accompany product W40391.

Additional Supplement to accompany product W40391.

On April 23, 2020, Franklin Templeton India Mutual Fund (FT) shocked investors by winding up six of its debt mutual fund schemes, amounting to assets under management of INR 267.79 billion, with over 300000 investors. The decision was based on the liquidity squeeze in the financial markets as COVID-19 forced the world, including India, into lockdown. FT was facing redemption pressures it could no longer meet without making distress sales of its underlying investments. The management deemed a distress sale to be far more detrimental to investor interests than freezing their investments in the fund. The question arises if there were other compelling reasons that brought FT to this unfortunate decision.