The Business Times

It's time to change the Asian mindset about corporate restructuring

Western financial centres see insolvency proceedings as gateways to potential business rescue. In Asia, insolvency is seen as a procedure ending in liquidation.

Published Mon, Oct 26, 2020 · 09:50 PM

IN ASIA, there has traditionally been a stigma associated with corporate insolvencies. The taint of insolvency can be hugely value-destructive; it can destroy the goodwill of the business, and brand the managers and controllers as failures and social outcasts.

Culturally, the problem is exacerbated by the dominance of family-controlled businesses, whose patriarchs or honchos are held in high esteem by the business community - and for whom the stigma associated with insolvency can often be unpalatable.

While there has been a gradual global shift from viewing insolvency strictly as a terminal procedure leading to inevitable liquidation, to recognising insolvency proceedings as a gateway to potential business rescue, this mindset change is largely limited to the leading Western financial centres, such as those in the United States and the United Kingdom.

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