The Fatal Pinch

The dangerous state has a name: the fatal pinch. It's default dead, plus slow growth, plus not enough time left to fix it. Companies in the fatal pinch almost always die, because every escape route needs either growth or time, and they have neither.

What makes it fatal is that it's invisible on the way in. Nothing dramatic happens. You just keep spending at a rate your growth doesn't justify, month after month, until the remaining runway is too short for any fix to land.

The whole point of the default alive question is to see the pinch coming while you can still steer. The company that knows it's default dead with 18 months left has options. The one that discovers it with 4 months left has a shutdown checklist.