Page 267 - Microsoft Word - 00 P1 IW Prelims.docx

UK syllabus: Auditing aspects of insolvency

To do this the company must ask its stakeholders to surrender some or all of their
existing rights and amounts due. They do this in exchange for new rights under a
new or reformed company and a share of the benefits that could arise due to future
investment.

This may be more appealing than the alternatives, which include:

 to remain as they are, with the prospect of no return from their investment and
no growth in their investment, or

 to accept whatever return they could be given in a liquidation.

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