Working capital had fallen from $26 million in 1926 to $3.5 million in 1932 and the banks were owed $6 million, for which they demanded payment. Studebaker defaulted and went into receivership.
The company's liquid assets plummeted from $26 million in 1926 to just $3.5 million by 1932, prompting the banks to demand payment of their outstanding debt of $6 million. As a result, Studebaker was unable to meet its financial commitments and was subsequently placed into receivership.