Indirect bankruptcy costs include the costs of avoiding a bankruptcy filing incurred by a financially distressed firm.

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Indirect bankruptcy costs refer to the various non-legal or procedural costs that a company faces when it is in financial distress, including efforts to avoid filing for bankruptcy, such as restructuring debts, losing customers, suppliers, or employees due to uncertainty, and the overall impact on business operations.

Indirect Bankruptcy Costs Include the Costs of Avoiding a Bankruptcy