Acme' s bank loan must be immediately repaid in full if Acme' s earnings fall below $1 million per year. If Acme has to repay the entire loan immediately, it will have to declare bankruptcy. Acme had seemed safe from bankruptcy, having reported annual earnings of well over $1 million in each year it has had the bank loan. However, Acme has now admitted overstating its earnings for last year
it will have to declare bankruptcy.
Acme has other debts besides the bank loan