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Liquidation and Receivership
Corporate Rescue Mechanism
Forensic Investigation
Value Creation & Divestments
Others
Value Creation and
Divestments
Divestments
Liquidation and Receivership
Liquidation
Liquidation is a formal process where a company’s assets are sold, and the proceeds are used to settle its debts. This service is often employed when a company is insolvent and unable to meet its financial obligations. A licensed liquidator is appointed to oversee the orderly distribution of assets among creditors according to legal priorities. The goal is to maximize returns to creditors and facilitate the winding down of the company in a transparent and legally compliant manner. There are 3 modes of winding up (1) Members’ Voluntary Winding up (for solvent companies) (2) Creditors’ Voluntary Liquidation (insolvent winding up) and (3) Court Winding up (12 various circumstances).
Receivership
Receivership involves the appointment of a receiver and/or manager, typically
by a secured creditor, to take control of a company’s assets. This occurs when a company defaults on its obligations, and the secured creditor/ financial institution/ debenture holder seeks to recover its debt by selling or managing the charged assets. The R&M’s role is to protect the interests of the secured creditor while acting in the best interests of all stakeholders. They may undertake measures to improve the company’s financial position, such as selling assets, restructuring operations, or facilitating a sale of the business as a going concern. Receivership aims to maximize returns to secured creditors while considering the overall financial health of the business.
Corporate Rescue Mechanism
(appointment under Debenture or court)
The Corporate Rescue Mechanism (CRM) under the Companies Act 2016 provides a framework in Malaysia for financially distressed companies to undergo rehabilitation and continue their operations, thereby avoiding the need for immediate liquidation. The objective is to facilitate the company’s turnaround and preserve its economic value. The 3 available Corporate Rescue Mechanism are Corporate Voluntary Arrangements (“CVA”), Judicial Management (“JM”) and Section 366 Scheme of Arrangements (“SOA”) key features of which include:
Appointment of a Qualified Person (QP):
- The process begins with the appointment of a Qualified Person (QP), who is typically a licensed insolvency practitioner. The QP assesses the company’s financial position and viability to determine whether a corporate rescue plan is feasible.
Moratorium Period:
- Upon the QP’s appointment, a moratorium is automatically imposed, providing the distressed company with a temporary shield against legal actions and creditor enforcement proceedings. This gives the company a breathing space to develop and implement a restructuring plan.
Development of a Corporate Rescue Plan:
- The QP works closely with the company’s management to develop a Corporate Rescue Plan. This plan outlines the strategies and measures to rehabilitate the company, addressing financial challenges, operational inefficiencies, and other issues contributing to its distress.
Creditor Involvement:
- The Corporate Rescue Plan is presented to the creditors for approval. Creditors are categorized into different classes, and their approval is sought through a voting process. For the plan to be accepted, it must receive the support of a specified majority in each class.
Implementation of the Corporate Rescue Plan:
- Once approved, the Corporate Rescue Plan is implemented, and the company undergoes the necessary restructuring, which may include debt restructuring, asset divestments, operational changes, or other measures outlined in the plan.
Supervision by JM:
- In certain cases, a Judicial Manager may be appointed to oversee the implementation of the Corporate Rescue Plan. The Judicial Manager reports to the court and ensures that the restructuring process is carried out transparently and in compliance with the law.
Monitoring and Compliance:
- Throughout the process, the QP or Judicial Manager monitors the company’s progress and compliance with the Corporate Rescue Plan. Regular reports are submitted to the court, creditors, and other relevant parties.
Termination of Moratorium:
- The moratorium period ends upon the successful implementation of the Corporate Rescue Plan. The company resumes its normal operations, ideally in a financially healthier state.
The Corporate Rescue Mechanism aims to strike a balance between protecting the interests of creditors and providing distressed companies with a viable opportunity to recover. It provides a legal framework for the orderly and transparent rehabilitation of financially distressed companies, contributing to the overall stability of the business environment.
Forensic Investigation
(under Companies Act)
Vide our affiliated firm, we use tailored investigation techniques and methodology to each clients to assist in investigating unusual financial/ corporate activities as part of our fraud investigation service. These activities could be highlighted from internal investigations or whistleblowing channels.
Other forensic related services are:
- Digital Forensic Investigations: Using specialised forensic tools combined with our specifically tailored investigation techniques and methodology, we will assist clients to collect, forensically acquire digital media (i.e. hard disk drives, backup tapes , mobile devices, tablets, memory cards, data sticks, etc.), and locate evidence that is relevant to the client’s concerns.
2. Anti-Fraud/ Bribery Framework: With our extensive fraud and investigation knowledge and experience, we will design and tailor an anti-fraud framework for our clients. We are also able to assess and improve existing anti-fraud framework of clients.
Please visit our affiliate’s website for further details. https://www.virdos-lima.com/areas-of-expertise
Value Creation & Divestments
(including divestment of assets )
Both value creation and divestment services aim to optimize the financial and operational aspects of a company. While value creation focuses on restructuring and improving the existing business, divestment involves strategically selling certain assets or business units to maximize returns and facilitate the company’s recovery.
Leveraging our expertise within the restructuring and insolvency industry, we provide value creation services to enhance businesses by restructuring/ streamlining their operations, finances, and assets that contribute to overall value improvement.
In divestment services, we conduct estimated business valuation(s), identify potential buyers, negotiate deals, and oversee the due diligence processes. Our goal is to facilitate transparent and compliant divestment transactions, optimizing returns for distressed companies and stakeholders.
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Others
- Expert Witness: Qualified professional possessing specialized knowledge to provide opinions and testimony in legal proceedings by conducting case assessments, preparing detailed reports, and testifying during trials.
- Financial Due Diligence: Examine company’s financial aspects to facilitate financial transactions. The process involves reviewing financial statements, analysing revenue, expenses, assets, and liabilities, and assessing cash flow and working capital, evaluating financial ratios, historical performance, and the quality of earnings, contingent liabilities, risks, etc. Interviews may also form part of the assessment. Financial due diligence aims to identify potential risks, ensure the accuracy of financial information, and facilitate well-informed decision-making in transactions such as mergers, acquisitions, investments, or loans.
3. Monitoring Accountant: Monitoring accountant services involve continuous review and oversight of financial activities to ensure compliance, accuracy, and transparency. Assess specific internal controls, analyse financial statements, monitor budgets and highlight risks. Contribute to fraud prevention, recommend process improvements, and provide advisory services to enhance financial efficiency and decision-making. The focus is on maintaining data integrity, facilitating accurate financial reporting, and addressing emerging issues promptly. These services are essential for organizations seeking ongoing financial health, regulatory compliance, and informed decision-making.
4. Agreed Upon Procedures: Agreed upon procedure (AUP) assignments involve tailored financial or operational assessments based on specific procedures agreed upon by clients and relevant parties.
Step into a Realm of Expertise.
Discover a partnership that transcends conventional boundaries and propels your business forward. With our Mergers & Acquisitions services, you gain access to a seasoned team of strategic advisors, meticulous analysts, and adept negotiators who craft tailored solutions for your unique aspirations. From comprehensive due diligence to seamless integration, we guide you through every facet of the M&A journey, ensuring that opportunities are maximized, risks are minimized, and value creation is at the forefront. Elevate your business potential today – join us in unlocking a realm of growth, innovation, and success.
