Internal reconstruction

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praveen

praveen (Querist)
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23 December 2013 conditions when internal reconstruction is desirable

CA Vijeta Verma

CA Vijeta Verma (Expert)
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25 December 2013 Mainly internal reconstruction is permitted by BIFR when it concludes that the company can perform well and survive given a chance after making some compormises.
Further,the interest of stakeholders & public may also adversely affected if the company is ordered for winding up ,so through internal reconstruction BIFR provides a kind of opportunity to company to prove its worth.The one year period is just like a do or die situation for the company.

CA Pallav Singhania

CA Pallav Singhania (Expert)
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25 December 2013 Internal reconstruction refers to the internal re-organization of the financial structure of a company. It is also termed as re-organization which permits the existing company to be continued. Generally, share capital is reduced to write off the past accumulated losses of the company.

The accounting procedure of internal reconstruction is distinct from that of amalgamation, absorption and external reconstruction.

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