STEP 1

Determine the value of total assets

Going Concern
RM'000

Freehold Land & Building

Less: Bank Overdraft

Liquidity
RM'000

590,500
210,000
380,500

Plant & Machinery

Fixtures & Fittings
Pattern
Investment
Inventory
Trade Receivables

53,560
3,000
60,000
107,200
216,000

450,000
210,000
240,000
2

820,260
Debenture

31,430
3,000
60,000
75,000
216,000
625,430

Prefential T.Payables

NOTES Non-Prefential

Recurring Rate
%

108,000
517,430
38,000
479,430

T.Payables

5
DEFICITS

532,700
(53,270)

# Choose Going Concern b'coz have higher value of assets

# If choose Liquidaty scheme shareholder got nothing
# Therefore should convice shareholder not to liquidate b'coz the amount is deficits
Working:
1
2
3
4
5

4,670 + 48,890
[(54,600 - 10,000) x 60%] + 4,670
240000 - 10%
Principle 100,000 + Interest 8%
570,700 - 38,000

RM'000
53,560
31,430
216,000
108,000
532,700

Notes to the Non-Prefential T.Payables

Only up to 479,430 that can be paid up which 90% from total amount of Non-Prefential
T.Payables 532,700 whilst balance the other 53,270 (10%) still not paid

Recurring Rate
%

f Non-Prefential

STEP 2

Determine the total financial losses to be written of

Accumulated Loss
Freehold Land & Building (590,500 - 412,000)
Investment (60,000 - 55,000)
Plant & Machinery (54,600 - 4,670 - 48,890)
Trade Receivables (240,000 - 10%)
Pattern
Inventory (131,100 - 107,200)
Fixtures & Fittings (11,550 - 3,000)
Preference Share dividend in arrears (30,550 x 6% x 3 years)
Additional cost
TOTAL

Note:
In Bracket because we want to calculate total loss amount only therefore we put
bracket if it gains to company

be written of
250,000
(178,500) Notes
(5,000)
1,040
24,000
115,000
23,900
8,550
5,499
1,500
245,989

only therefore we put

STEP 3

Determine the reduction in claims

Preference Share Dividend in arrears

Ordinary Shares
Preference Shares
Non-Preferential Trade Payables

Amount Reduction
RM
%
5499
100
175000
50
12220
40
53270
10
245989

NOTES:
Percentage can put sesuka hati je but percentage at the lowewr must not
exced the above
E.G.
%
OS
35%
This is wrong, must OS (above) higher
PS
45%
% than PS (lower)

NOTES

STEP 4 Propose the capital reduction or reconstruction scheme

1 Reduce Par value of Ordinary Share by 50%

2 Consolidate share from 2 to 1
3 Preference Shareholders are to waive their claims or dividends
4 Reduce Par value of Preference Share by 40%
(a) By issuing new OS
(b) By change the PS to Non Cumulative Preference Share
5 Reduce Claims for non preferential Trade Payables by 10%

Example
200m OS x RM 1 > 200m OS x RM 0.50
200m OS x RM 1 > 100m OS x RM 1.00
5,499 > Write Of