ABC Mega Catering Sdn Bhd (ABC) was established in 2005 by Ali, Baba and Chong. Thecompany reported more than RM1 million losses in the year 2020 and the figures expected to behigher for this year. The COVID-19 pandemic forcing the company to let go many employees;the number of its staffs has reduced from 500 to 200. The debt problem also escalating and thecompany is determining its ability to pay the debt. ABC lost its major customers and theirbusiness had dropped significantly. Luckily, the fair market value of company's two acres landin Alor Setar has considerably appreciated since their purchase in 2015.

The three directors had identified several options to remain survive in the catering business. Thisincludes to venture into new business segment by incorporating a new company and study theexisting loan agreement and registration of charges. The latter option, however, become the mainbusiness agenda to concentrate. Business rehabilitation and restructuring through excessive courtinvolvement is not in their mind. Further, directors want to avoid business winding up andbelieve that their image as directors must be preserved. Their aims are to retain the existingemployees, improve the cash flows position and ultimately enhance its bottom line. That's it andnothing more.

REQUIRED:

Based on the above situation, advise Ali, Baba and Chong on the most suitable corporate rescuemechanism to be implemented. Justify your answer. Also, explain the consequences of windingup.