Impact of Financial Distress on Capital Structure

ABC Corp is currently facing financial distress due to declining revenues and increasing operational costs. The management is considering various strategies to alleviate the distress and stabilize the company. One of the options on the table includes restructuring the capital structure to reduce debt levels while possibly issuing equity.

This situation raises important questions about the implications of capital structure decisions on financial distress. Which of the following statements accurately describes a potential impact of high financial distress on ABC Corp's capital structure?