How can a profitable company go bankrupt due to a maturity wall?

How to answer

If a company's debt is concentrated in a single maturity date (a 'maturity wall') and credit markets are closed when that maturity hits, the company may not be able to refinance — even if it's profitable on a GAAP basis. Bankruptcy happens when cash runs out, and refinancing risk is one of the most common triggers in distressed scenarios. Examples: 2008–09 'credit crunch' bankruptcies, COVID-era distress for cyclicals with bond walls. To mitigate, companies and bankers spread maturities (a 'laddered maturity profile'), maintain undrawn revolvers, and refinance well in advance of maturity. When evaluating credit quality, look at the maturity profile — a company with $2B due in 12 months and $500M of cash is at risk regardless of how profitable it is.