Page 53 - E-BOOK

use for the settlement; or (3) the debtors go out of business and there are other preferential creditors,
whereas their total debts exceed the total assets of such a debtor. For this case, the Company will
equest the approval for no further legal proceedings, the termination of debt collection, and deplete
the bad debt within the current accounting period.
- The debtors that after the legal proceedings are initiated: (1) in the Civil Court, the court has issued
the ruling but the debtors do not have any asset that can be used for the settlement; or for the case
of bankruptcy, whereas the court issues a compromising order or the court orders the debtor to be
bankrupt and the primary distribution of the debtor’s assets is complete. (2) The Company spends an
appropriate amount of effort and time to collect the debt and fails to collect the debt. (3) After the
investigation for legal execution, no other assets that can be used for the settlement are found.
For this case, the Company will request the approval for depleting the bad debt within the current
accounting period.

• For the case of guaranteed debtors
The Company may deplete bad debt from the account receivable only when:
- The legal proceedings are complete for debtors, in which: (1) in the Civil Court, the final judgment
is issued and the Company submits the request for distributed share of the settlement or request for
the preferential settlement, for the case where there are multiple creditors; (2) for the case of bankruptcy,
whereas the court issues a compromising order or the court orders the debtor to be bankrupt and the
primary distribution of the debtor’s assets is complete. 51
- The Company spends an appropriate amount of effort and time to collect the debt and fails to collect
the debt.
- After the investigation for legal execution, no other assets that can be used for the settlement are found.
- The legal execution for collateral enforcement and auction is complete and the debt was partially
settled by the cash flow generated herein.
For this case, the Company will request the approval for depleting the bad debt within the current
accounting period.

(3) Types of NPLs categorized by collaterals types
Most of NPLs bought by the Company are guaranteed by collaterals most of which are real estate properties
of higher appraised prices than the cost of NPLs. In most cases, the Company has the preferential right for the
settlement out of the enforcement of those collaterals. However, in the past, the Company also bought
nonguaranteed NPLs, for example, credit card debtors. This is because back then, the Company believed that such
a type of NPLs would provide a good business opportunity. Anyway, the Company may, from times to times, buy
more non guaranteed NPLs in the future. Besides those nonguaranteed NPLs already acquired by the Company, the
Company still has some nonguaranteed NPLs left and these nonguaranteed NPLs still have some book values. The
remaining book values are the result of several causes, for example, debtors may already transferred all of their
available collaterals to the Company, or the Company may already sold the collaterals of those NPLs by auction,
at the auction prices that are lower than the book values of those NPLs. In this case, the Company will record the
allowance for the doubtful debt of nonguaranteed NPLs at the same value as the remaining book value, after the
settlement by the transferring or selling of collaterals of those NPLs. The details of collaterals and types of NPLs
categorized by collaterals types are, as follows.