Abstract:

Restructuring of the company does not happen overnight and needs to follow some tips when it comes to implementing some changes in the organization to ensure that the  changes  are  effective.  The  fundamental  reason  of  restructuring is  to  further enhance  the  long-term  survival  of  the  corporations  through  greater  efficiency  and cost-effectiveness which  can  be  achieved  only via  effective  corporate  governance. Effective  corporate  governance  is  essential  for long-term  corporate  success.  This paper will examine the current Insolvency law in Malaysia relating to the restructuring
of financially distressed SMEs (small and medium sized companies). The source of distress for many companies is largely related to financing, which when resolved, will significantly improve their prospects and viability. Hence, a more balanced approach of good corporate governance  to address corporate financial distress is needed in terms  of  orderly workouts  of  debtor-creditor  problems.  This paper  further analyses the strength and weakness of the prevailing system and suggests new patterns and features of restructuring in small and medium-sized corporations in Malaysia.